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Badilisha Lugha KISWAHILI

How TRA is grappling with tax defaulters

5th November 2012

Tanzania Revenue Authority has announced measures to counter tax defaulting and said it was now devising means of handsomely rewarding the ‘informers.’ These defaulters are mostly those who bring their merchandise through unofficial paths along the porous borders commonly know as panya routes.

The measures follow recent complaints by Mabibo Beer Wine and Spirit company which are the legal importers of beer known as Windhoek that their kind of product finds its way in Tanzania through porous border points without paying tax.

TRA has categorically stated that it would take stern measures to such people and asked people to cooperate.

TRA’s Tax Payers Education Manager, Diana Masalla says her organization has always been cooperative when ever it gets information on tax defaulters and that it has always protected those divulging the information to the authority by not making them public. She also said the authority has always awarded those giving the information.

“If a person gives us the clue on the tax defaulter we demand the money which has been defaulted and we pay the good Samaritan an amount equivalent to three percent of the money supposed to be paid by the defaulter,” she says. She says TRA has a special investigation department which deals with all maters concerning tax evasion.

The TRA Tax Investigation Assistant Commissioner, Eva Mmasi confessed the complexity of the tax evasion saying however that the authority is using the resources available to make sure that such a malpractice is checked.

“We have to use various methods to deal with tax defaulters, but the defaulters are also using various means to make sure they device new ways of evading tax. We have patrol boats but as you know we have a big border area and we cannot be everywhere at a time,” she says.

She said people who know how these unscrupulous people operate should take the issue to TRA so that it could deal with them stating that the matter was in the interest of the country’s development.

“It is true that goods that enter the country clandestinely cause unfair competition in the local market because those who legally bring goods to the country and pay the necessary taxes are disadvantaged while those who do not pay tax are advantaged,” she stressed.

Recently, James Rugemarila who is International Consultant with Mabibo Beer Wine and Spirits said Mabibo Beer Wines and Spirits Ltd (MABIBO) once again are the sole promoters and registered exclusive users of the Windhoek beer trade mark in Tanzania.

He said in order to establish the identity for legally traded Windhoek beer in Tanzania Mabibo embosses code number MB66 on all her imported Windhoek beer.

He said it meant that all imported Windhoek beer with code number MB66 is the bona fide Windhoek beer for Tanzania and it also means that the beer has met all customs requirements, including payment of required customs duties and taxes.

“Mabibo sought to formalize legally the Windhoek beer trading modalities in the country and therefore submitted the documents to the Resident Magistrate of the Kinondoni District Court, assigning to Mabibo the exclusive use of Windhoek who after satisfying himself that the documents were in order, gave a decree which pronounced that it would be a criminal offense for any person to sell Windhoek beer in Tanzania which does not bear the code number MB66 without specific written consent from Mabibo Beer Wines and Spirits Ltd”, he said.

He said the obvious advantages for establishing a legal basis for business conduct are many but the most important are that: the consumer is guaranteed a safer product when the source of that product is legally recognized.

Secondly, legitimate customs duty paid and duly received by government coffers is for the benefit and welfare of a wider society in the country. Thirdly, legitimate business promotes competition in the economy which is vital for business growth, investments growth and inherent interests of the consumer.

He said contraband business has very serious negative effects for Tanzania. For example, those who import contraband Windhoek beer short change government revenue to the tune of 10,000 shillings per carton.

Besides stunting business development in the country, contraband trade discourages investments and it does not do justice to society because the taxes which the consumer contributed in the price of the contraband item does not enter into government coffers. In, short contraband trade is done on the basis of deceit.

“This is why at the meeting held on 24th August, 2011 the Tanzania Chief Editors’ Forum, the Tanzania Revenue Authority (TRA), the Tanganyika Law Society (TLS), the Tanzania Police Force and Mabibo Beer Wines and Spirits Ltd agreed to implement the Kinondoni Resident Magistrate decree that outlawed the sale of Windhoek beer which does not bear the code number MB66”.

In order to give notice before fully implementing the Kinondoni Resident Magistrate decree in an orderly manner, the following measures of lenience by MABIBO have been offered: Initially, not to take any punitive measures against all traders with Windhoek beer which does not bear code number MB 66.

Traders with Windhoek beer which does not bear code number MB 66 were asked to bring them to Mabibo company before 30th September 2012 and get in exchange, Windhoek Premium Lager Beer with the required code No. MB66.

Apparently, there are people who appear not to want to take advantage of this opportunity thinking that they can continue with contraband business. Recently, Mabibo Beer Wines and Spirits Ltd became aware of traders who are involved in the con business of contraband business.

For example, Mabibo Beer Wines and Spirits Ltd now knows that there is Windhoek beer bearing code number Nov-2012 2034E516711348 and code No. Nov-2012 2034E51612159 which is contraband. Such business people whose business is based on deceit evade taxes and cause the government not to carry out her responsibility to the public as it could have done if all taxes were paid.

It is gratifying to report that all stakeholders, especially the Government Institutions and Mabibo Beers Wines and Spirits Ltd, have vowed to fight contraband business and tax evasion mercilessly. We want to insist that legitimate business is in the interest and well being of us all and society at large.

Tanzania needs every possible tax to be duly collected from all imported goods which are taxable by law. Therefore, it is not expected to have people dealing in contraband goods. Such conduct disrupts the market, discourages potential investors and denies the government the revenue it deserves.

Contraband business should be fought hard by all people in order to avoid the negative effects such business causes in society. This is not an issue for law abiding business people alone. It is an issue which the whole society at large should be united and fight against.

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