TRA's Sh8 tr uncollected revenues due to snags
The high rate of unresolved applications was attributed to inadequate capacity of staff in relation to applications for tax objections filed by taxpayers.
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The CAG reports shows that the bulk of the uncollected amount, about Sh6.8 trillion, were pending in tax appeals bodies.
Dar es Salaam. About Sh7.8 trillion has not been collected by the Tanzania Revenue Authority due to negligence, inefficiency and backlog of court cases the Controller and Auditor General report released yesterday indicates.
In a thorough assessment of the performance of tax collections in the country the CAG report says part of the reasons that the Revenue body fails to meet its revenue targets-amounting to 11 per cent deficit in the financial year 2014/15- were because of failure to collect all due taxes from registered tax payers.
The CAG reports shows that the bulk of the uncollected amount, about Sh6.8 trillion, were pending in tax appeals bodies.
“My audit this year noted that TRA had long outstanding cases at various tax appeals machinery amounting to Sh6,850 billion of which Sh187 billion are stuck at the Court of Appeals, Sh2,780 billion at the Tax Revenue Appeals Board and the remaining balance of Sh3,883 billion awaiting ruling at the Tax Revenue Appeals Tribunal,” the report reads in part.
The amount tied in legal disputes alone could fund the 2014/15 budget by 30 per cent if they were ruled in TRA’s favour. It is equivalent to half of total domestic revenue (Sh12.2 trillion) for the 2014/15 budget.
The amount, which is equivalent to 8 per cent of nominal Gross Domestic Product is also in contrast to the Sh1 trillion that President John Magufuli said was tied in the courts when he officiated the law day in February.
The amount would have enabled the government to fund the total development budget of Sh6.4 trillion by more than 100 per cent.
The exorbitant amount has been tied in the courts for the last 14 years because of ineffective and inefficient tax appeals machinery, and partly due to lack of funds for the tax appeals bodies, according to the CAG. But in a sign that shows a worrying trend the amount pending in courts jumped from Sh1.7 trillion in June 2014 to Sh6.8 trillion in June 2005 an increase of more than Sh5 trillion in one financial year.
“Tax revenue tied up on appeals cases has increased from Sh1,716 billion [in 2013/14] to Sh6,850 billion in 2014/15, an increment of Sh5,133 billion equivalent to 299 per cent. This shows how the inefficiency of the appeal system costs the country in terms of resources that the Government incurs to run cases for such a long time and loss of revenue when appellants become bankrupt before their appeals are resolved,” the CAG report says. The CAG report said the TRA failed to resolve objection from taxpayers resulting from payment of Sh580 billion in the fiscal year 2014/15.
The revenue body failed to collect Sh9.2 billion from goods that, despite being declared as transit, never crossed the borders, according to CAG’s own investigations. “I recommend that evidence of the exports of the goods be provided otherwise provide recovery evidence of the said amount of customs duties,” the report says.
Tax payers who delay in paying the requisite taxes are supposed to pay penalties but the revenue body failed to collect about Sh1.8 billion of venalities.
Uncollected taxes, after assessments were done, amount to Sh297 billion while uncollected oil import duties were Sh5.7 billion. The TRA also failed to collect Sh44 billion taxes that had been under assessed and also failed to collect the Value Added Tax amount to Sh500 million.
