Tax disputes resolution in Tanzania

Last week’s article discussed tax dispute resolution mechanism in Tanzania with a focus on tax audit.

This is because in most cases tax disputes arise after a tax decision e.g. issuance of a tax assessment which may be preceded by a tax audit / examination. We looked at tax audits by the tax authority and key matters for a tax payer to be aware so as to mitigate the possibility of a tax dispute. Today’s article discusses tax assessments.

Tax assessments
The Tax Administration Act, 2015 define tax assessment as “determination of the amount of tax liability made under a tax law by the Commissioner General or by way of self-assessment and it includes matters prescribed in the first Schedule”.
To most tax payers’ tax assessment is a document or form issued by TRA to inform the tax payer the amount of tax determined.
An assessment should normally contain the name of the tax payer and Tax Identification Number (TIN), the assessment of tax payable, the event or matter of the assessment, unpaid tax amount, reasons for the assessment and the due date for payment of payment of the tax and should also stipulate the time, place and manner of objecting the tax assessment.

Types of tax assessments
There are numerous types of tax assessments which include:
•  Self-assessment
•  Jeopardy Assessment
•  Adjusted Assessment
•  Interest   and penalty Assessment
•  Gaming tax demand notice
•  Stamp duty-note, certificate, decision or requirement of a Stamp Duty Officer etc
Self-assessment: By fulfilling the obligation to file a tax return a tax payer performs a self-assessment. Thus for instance, when a person files Value Added Tax (VAT) return, Skills and Development Levy (SDL) return, a Gaming tax return (s 31)-Gaming Act or Excise Duty return he/she makes a self-assessment.
Jeopardy assessment: This is an assessment made by the Commissioner General when he sees that tax revenue is under threat if an assessment is not made.
For instance when the Commissioner General has a reasonable cause to believe that a tax payer is intending to leave the country or has already left the country on a permanent basis and no tax has been assessed on the person. Thus the Commissioner may establish the amount of income of the tax payer using his best judgement and issue a tax assessment thereof. Normally the Commissioner must have a basis or evidence for the assessment (use the available information) and cannot use guesswork to arrive at the amount of tax payable.
Adjusted assessment: This is made by the Commissioner General when the self-assessment by the tax payer is deemed unreliable. Adjusted assessment ensures that correct amount of tax is assessed.
The assessed tax and interest thereon may become payable in a month or longer period as allowed by the Commissioner General. The Commissioner General is required to use “best judgment” (available information) to make adjusted assessment.
However the statute of limitation for adjusting an assessment is 5 years except in case of fraud, willful neglect, or serious omission. Thus, the Commissioner General’s powers to adjust a return expires five years from:
• Self-assessment: the due date for filling the tax return.
• Original assessment: the date on which the Commissioner General serves notice on tax payer.
• Adjusted assessment: the date referred to in original assessment.
Further, the TRA Commissioner General cannot adjust an assessment adjusted by Tax Revenue Appeals Board or  Tribunal  or Court order.

Mr Makundi is a partner with Auditax International