How will the 2022/23 budget speech accommodate Samia’s orders on tax?

By Alais Rundya Mwasha

Within the past five days, most of the tax professionals and of course tax officials encountered series of enquiries from the business community concerning the cheered instructions given by our President her Excellency Mama Samia Suluhu Hassan.

The immediate reaction from the crowd at Kagera “Oyeeee, oyeee, CCM oyeee” and subsequent social media platforms clearly portrays a huge hope and relief to the Business community i.e tax payers following the President’s orders. In a nutshell, I received inquiries such as 1. When will the implementation of the President commence? 2. Will the Minister of Finance / TRA issue official notice / Regulations on the implementation of this new order? 3. What will happen on my ongoing tax audits / Investigations which cover more than one year? 4. I have an ongoing tax audit covering more than three years, can we share Madam President’s speech with the tax officials to refrain them to extend the coverage beyond one year? 5. I have received audit findings covering more than four years should I respond to the tax findings for one year alone due to the President’s instructions?

Surprisingly, some of inquiries appeared to be overboard such as 6. Will I be refunded for the recent tax assessments paid to the TRA beyond one year? 7. Please share with me the speech of Mama Samia I want to use it during the preliminary entry meeting with TRA tomorrow.

On 9th June, 2022 our President her Excellency Samia Suluhu Hassan gave a profound instructions to the tax and revenue collectors regarding the duration and coverage of statutory audits. Part of her speech went as follows, “ …………………Mnaloweza kufanya ni kurudi mwaka mmoja tu nyuma. Kwa sababu inawezekana kabisa, labda mwaka jana hamkumaliza pilika pilika za kufanya mahesabu kwa hiyo wafanya biashara walipe kuanzia mwaka jana lakini kama ni miaka mitatu, mine, mitano nyuma . Ulikuwa wapi? Achaneni na hiyo biashara. Wapeni raha wafanyabiashara wafanye Biashara zao (Hadhira ikipiga makofi huku Rais akizungumza) Sasa msisitize (Hadhira ikipiga makofi huku Rais akizungumza) Msisitize ukusanyaji wa mapato kuanzia tulipo, kwenda mbele asitokee mfanyabiashara hakulipa anachotakiwa kulipa. Ni sasa kwenda mbele, ule udhaifu mliokuwa nao kule nyuma hamuwezi kuulipa sasa kwa kuwapa adhabu wafanyabiashara. Naomba wasimamiaji kodi simamieni kwa makini.” In a nutshell, the President directed that tax bills should be determined for one prior year. Tax assessments of five or six years back should be discourage as the backlog of open years is not solemnly due to the taxpayer’s fault. Most tax professionals will agree that the President’s directives are aligned with the fundamental canon of taxation presented by Adam Smith in his famous book “The wealth of Nations”, Canon of Certainty. This canon argues that the tax which an individual has to pay should be certain and not arbitrary with respects to the time of payment, the manner of payment, the quantity to be paid (tax liability) etc. In other words, Canon of Certainty states that there must be certain to the taxpayer as well as to the tax-levying authority in respect to certainty of revenue the government intends to collect over the given time period. Of recent, we have experience exceedingly improvements done by the TRA during the recent years to automate most of compliance processes which helps to address the backlog of tax bills. This can be experienced in online filing of returns, submission of VAT returns and correspondences with tax payers. The efforts and commitment by all Commissioners which achieved the current automation is indeed commendable. The implementation of the President’s orders will definitely require alignment with the tax regulations governing the administration of tax collections. Today the 14th June, 2022 at 4:00pm the Minister for Finance and Economic Affairs, Hon Dr. Mwigulu Lameck Nchemba is expected to table the 2022/3 Budget Speech in the parliament. In practice, the minister speech will contain various fiscal and policy measures for the forthcoming fiscal year. It is the expectation of the public that the Budget speech will contain necessary amendments pertaining to the tax administration adhering to the President’s instructions ordered in Kagera.

Presumably, the Minister’s speech which will be the basis of the Finance Act of 2022 will contain several proposed tax measures to relevant provisions of the law. For instance, Section 48 of the Tax Administration Act empowering the Commissioner to adjust an assessment within five years will require to limit the duration to one year instead of five years.

In conclusion, we anticipate that the forthcoming Minister’s speech will contain vital amendments which will accord the business community peace of mind when carrying out their affairs but still every business will have to adhere with payment of the required amount of tax on time and voluntarily.

Advocate Alais Rundya Mwasha is a Legal Partner at Hassock Associates. He can be reached through Email: [email protected]

Disclaimer: The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of The Citizen.