“A tax assessment is not the end of the Argument, it may be the beginning of the Dispute”. This adage is evident when one assesses taxation events in Tanzania. For instance, the 2024/2025 report of the Controller and Auditor General (CAG) shows that a total of one thousand two hundred and twenty-three (1,223) tax cases valued at TZS 4,862,507,875,014 are pending before the Appellate Machinery i.e., Tax Revenue Appeals Board (“TRAB”), Tax Revenue Appeals Tribunal (“Tribunal”) and Court of Appeal (“Court”). All of these pending tax cases were once adjusted tax assessments issued by the Tanzania Revenue Authority (TRA).
In Tanzania, a tax dispute normally commences at the objection stage, as aptly reiterated by the Court in civil appeal No.216 of 2025 between Aggreko Energy Rentals Tanzania Ltd and Commissioner General. Procedurally, the TRA issues the adjusted tax assessment upon the completion of the tax audit and, if aggrieved, the taxpayer will lodge her objection within thirty (30) days. The TRA will thereafter determine the objection; if still aggrieved, the taxpayer will seek redress before the Appellate Machinery.
For 2025, fifty-four (54) tax cases were deliberated by the Court, forty-four (44) cases (83%) were decided in the TRA’s favour while nine (9) cases (17%) were ruled in the taxpayers’ favour. Up to August 2026, a total of twenty-three (23) tax cases were deliberated by the Court, seventeen (17) cases (73%) were decided in the TRA’s favour while six (6) cases (23%) were decided in the taxpayers’ favour.
It is apparent that the taxpayers’ win rate for the years 2025 and 2026 in the context of deliberated tax cases by the Court is low compared to the TRA’s win rate. Numerous reasons have been attributed to the observed low win rate of taxpayers. However, for me, the relevant question is how best can taxpayers improve their win ratio in the context of tax disputes?
To comprehensively address the above question, it is important to understand that tax disputes are normally categorized into factual or technical disputes. Factual disputes entail situations where taxpayers have failed to accurately ascertain the fronted facts i.e., producing sufficient documentary evidence, while technical disputes entail situations where the taxpayers’ interpretation of tax provisions contradicts the TRA’s interpretation of the same provisions i.e., technical interpretation of the term “professional services” for withholding tax (WHT) purposes.
In my opinion, improving the taxpayers’ win ratio should commence by adopting effective tax planning. Taxpayers should always involve tax experts when executing high-value contracts or effecting huge transactions to better understand, know and plan against the potential tax implications of such contracts/transactions. Furthermore, taxpayers should normalize periodic tax health checks to better discern inherent tax exposures (potential strategies to mitigate risks) and tax-saving opportunities (potential strategies to maximize opportunities).
Getting it right at the audit stage is another critical ingredient in improving the taxpayers’ win ratio. To achieve this, taxpayers should ensure that the entry meeting is planned comprehensively, as it sets the tone and approach of the entire audit. Further, taxpayers should strongly involve tax experts during the audit to ensure that sufficient documentary evidence for ascertaining certain tax assertions is adduced and comprehensive technical arguments are construed against the TRA’s technical enquiries.
With the recently established authority on civil appeal No. 223 of 2025 between Scanad Tanzania Limited and the Commissioner General, taxpayers may rely on new evidence not previously available during the tax audit when objecting to the impugned assessment. Taxpayers should bank on such authority to ensure that their objection is indeed strong by fronting strong technical arguments backed by relevant case law and adducing sufficient documentary evidence to ascertain the facts.
For ambiguous tax provisions, the Government may assist in amending or repealing such provisions through the involvement of relevant tax stakeholders. For instance, the Government may clarify ambiguous areas including but not limited to
What suffices as all reasonable steps taken in the context of loan write-offs
Deemed distribution of undistributed profits whether it applies yearly or cumulatively
Scope of change in control provisions whether it covers Ultimate Business Owners (UBO) or any owner
Application of Controlled Foreign Corporations (CFC) provisions on resident entities owned by non – resident shareholders
VAT treatment of reimbursable HR costs in outsourcing contracts.
Clarifying/repealing ambiguous tax provisions would not only improve the taxpayers’ win rate but also address tax case congestion before the Appellate Machinery. It is imperative to remember that tax disputes are not merely revenue disputes, they are investment risk disputes, thus, creating conducive business and investment environment may mean adopting necessary action to reduce tax disputes.
