Tax-related enquiries from the Tanzania Revenue Authority (TRA) can come in many forms.
An enquiry can be a question or request for information through a phone call, a text message, an email, a letter or even a one-to-one conversation. But some tax enquiries can be more serious than just the simple questions or requests.
For example, audit, investigation, verification exercise, inspection, or even search of premises or your home. But, unlike enquiries from your other stakeholders, say your customers or suppliers, enquiries from a tax authority need to be handled with extra care.
You have various legal obligations under the tax laws. The obligation to keep documents and information pertaining to your business for at least five years. The obligation to provide accurate and complete information.
The obligation to grant free access, facilities and assistance to TRA. Providing false or misleading information to TRA is an offence. Failure to provide information, access, facilities or assistance may be charged as an offence for impeding tax administration.
You may decide not to, voluntarily, cooperate with TRA. But that may not be as helpful. Apart from your legal obligations and the possible sanctions thereof, tax laws give TRA massive powers to gather information from taxpayers or third parties. And TRA can exercise most of their powers without court orders. TRA have powers to access any of your assets, information or premises any time.
The only exception is dwelling houses where a court order is required for access between 6 pm and 9 am. TRA can also use experts or officers from other government institutions such as police. TRA can also seize, retain and restrain assets or documents. TRA can also restrain persons.
Simple tax enquires may also extend to more serious tax enquiries like a tax audit or even a tax investigation if a tax crime is suspected. Tax enquiries may not necessarily end in a tax liability. But most of the enquiries will do.
Especially if they are not handled carefully. Either a new tax liability or an amended one. Even in cases where TRA is unable to gather information from you, TRA can use third-party information or use their best judgment to estimate tax liability. Again, TRA has massive powers to collect taxes.
They have various tools at their disposal to collect the tax directly from you, the taxpayer. In this respect, TRA can create a charge over your assets, sell your charged assets, restrain your assets or even restrain you if you are likely to flee.
TRA is also empowered to collect from third parties. If you are an entity, TRA can collect the outstanding tax from managers or directors of the entity. TRA can also collect from your debtors, guarantors, receivers or liquidators and agents.
Despite the massive powers given to TRA, as a taxpayer you also have some rights. TRA, with limited exceptions, is obliged to treat information collected from you as “secret and confidential”. In the course of a tax enquiry, you may decide to be represented or assisted by your tax consultant.
You may decide not to cooperate with TRA officials if they fail to properly identify themselves.
You also have a right to reasonable compensation for lost or damaged documents, assets or sample retained by TRA.
There is also a statute of limitation where TRA is barred from amending your tax return after five years