Controller and Auditor General, Charles Kichere said in his 2019 audit report that there had been inadequate usage of Telecommunication Revenue Assurance System (TRAS) by TRA to verify the completeness of revenue and tax from telecommunication service providers.
“Whenever TRAS was not used, revenue amounts from telecommunication service providers were not objectively verified,” the CAG report stated noting that there has been a contradiction of information between the TRAS and electronic Revenue Collection System (eRCS).
“TRA did not effectively use eRCS to verify the tax. In the financial year 2018/2019 there was no confirmation that 681.33bn/- was verified through eRCS,” the CAG stated.
The CAG further noted that the two electronic systems used to verify the correctness of tax returns submitted by telecommunication service providers differed.
“Because of the aforesaid situation, the process of verifying tax return submitted by TSPs (telcos) was difficult to identify true information. Up to the time of writing this audit report there was no reconciliation after comparing the two systems,” the 2019 audit report added.
The report noted that TRA tax audit plans did not cover all six telecommunication service providers in every financial year and that even in those years in which the telcos were included in the plan for audit, the plan was not implemented as approved.
“The effects of the tax audit are very positive, in one of the conducted tax audits, to one TSP, TRA was able to identify about 208bn/- as a variance between VAT returns submitted and actual taxes paid,” the report stated.
The CAG report also censured TCRA for not being able to monitor the revenue generated from over the top services because the existing Telecommunications Traffic Monitoring System (TTMS) did not have a module for, specifically, monitoring the OTT services.
In conclusion, the CAG said despite government efforts through TRA toward improving revenue collection from telecommunication service providers, more interventions were needed for further improvement.
“The findings presented in this report endorse that, there were still some loopholes that would lead to loss of government revenue from the existing telecommunication companies. Both Tanzania Revenues Authority and Tanzania Communications Regulatory Authority have not adequately worked together to ensure that revenues from Telcos are effectively being collected,” the CAG observed.