TRA now plans to use tenants to collect taxes from landlords

Senior Journalist with The Citizen

Mwananchi Communications Limitted

What you need to know:

According to TRA, the law required the house owners to be the ones to submit the house rent tax, something that has not been implemented properly and thus as one of the ways to facilitate collection of Sh23.65 trillion as tax by the end of the financial year 2022/23, it had to review the law and come up with a new strategy.

Dar es Salaam. Tanzania Revenue Authority’s (TRA) plan to give tenants a mandate to withhold 10 percent of house rent in both private and commercial houses as a way of expanding the scope of tax payment has been greeted with mixed reaction among concerned groups.
According to TRA, the law required the house owners to be the ones to submit the house rent tax, something that has not been implemented properly and thus as one of the ways to facilitate collection of Sh23.65 trillion as tax by the end of the financial year 2022/23, it had to review the law and come up with a new strategy.
Speaking to journalists yesterday on TRA’s strategies to achieve the collection target as part of the government’s budget of Sh41.48 trillion, the authority’s Taxpayer Services and Education director, Mr Richard Kayombo, among other plans, explained the change that will see tenants submit tax instead of landlords.
“Any tenant, whether in a private house or a business house, is responsible for withholding 10 percent of rent and submitting it to TRA as government tax, unless there is another agreement where the landlords and landladies themselves will come to pay at TRA,” explained Mr Kayombo.
He said in the past only tenants in commercial buildings were paying the tax, but now even private tenants will be required to withhold 10 percent as government tax.
“As we continue, we will set better procedures and provide guidelines, including using local officials to make this exercise successful. Also, there must be a contract between a tenant and the landlord which will be the basis for the submission of the tax and once it is paid, they will be given certificates,” he said.
This comes one year since the government started the implementation of property tax collection through purchase of electricity tokens and on this new move, owners of rental houses have said that it is better to pay the tax themselves than through their tenants.
A landlord in Dar es Salaam whose name has been withheld told The Citizen that instead of tenants withholding and paying the tax, the government through TRA should create a procedure that will force the owners (the ones doing business) to pay it.
“So why should my tenant deduct and pay tax from my money? It is better to have a procedure that will force me to pay that tax rather than receiving a deducted rent,” he said.
He noted that lack of procedures may have led to the law not being observed by property owners and that the mistakes were not theirs. He also lamented that even so, the 10 percent was too high for them.
“Why is that rate so high? It would be better if it were two to three percent. This is so big,” he complained, while assuring that given better procedures, he would always adhere to the requirement.
But, Ms Margret Moses who resides in Segerea said she has already been doing that by asking her tenants to pay her through the bank where she has been directly submitting the 10 percent tax to TRA without any problem.
“This development has existed, but it seems that many did not have enough knowledge about it. I’ve been doing that and I’m already used to it, so I advise the house owners to submit it to the taxman. It is absolutely possible and it should not affect the tenant in any way,” she said.
For his part, Mr Moses Amani a resident of Mbezi, said by phone that the move will be better for TRA, but it may bring hostility between tenants and landlords.
“This step is not suitable because it is difficult for me to deduct rental money and send it to the TRA while the landlord/landlady is around. Why can’t he or she do that? Why doesn’t TRA follow him and hold him accountable?” he questioned.
Meanwhile, TRA has made amendments to the law of foreign vehicles passing on Tanzanian roads where there has been a reduction in the rate of payment on foreign vehicles with more than three axles from $16 to $10 per 100 kilometres.