TRA raises CSOs taxation liabilities

25Sep 2021
Alima Nkwong
Dar es Salaam
The Guardian
TRA raises CSOs taxation liabilities

THE stalemate over what taxes non-governmental organizations (NGOs) should pay is now over after lengthy consultations that began in 2019, the Tanzania Revenue Authority (TRA) said yesterday.

TRA launched a tax guide to be distributed to all NGOs, outlining the types of taxes NGOs are supposed to pay and when to do so, where the tax body indicates that NGOs will henceforth be subjected to eight taxes.

Before the outcome of consultations, civil society organizations (CSOs) were liable to pay four taxes, namely ‘pay as you earn (PAYE), the skills development levy (SDL), withholding tax on services that is identified with value added tax (VAT), apart from customs duties.

CSOs will now pay corporate tax—charitable organizations, withholding tax on rent, return on investment and stamp duty, the tax document affirmed.

The simplified guide outlined that CSOs are required to make payments for corporate tax in quarterly instalments each quarter for the year of income and file an estimate of tax payable for the year of income by the end of the first quarter. That is also the date for payment of the first tax instalment, it affirmed.

Filing return of income should be effectuated not less than six months after the income year  elapses, accompanied with a certified financial statement, as failure to submit tax return by due date and paying the relevant tax (if any) will attract penalty and interest, it cautions.

The hand-out stipulates that NGOs renting premises or other spaces are required to withhold tax before making payments to landlords/managing agents and then remit that tax amount to TRA as specified by the law.

Regarding the tax on return on Investment, TRA specifies that NGOs owing property/ building and using it to derive income or hold investments in financial markets are liable to pay taxes on the investment return.

They should keep records/proof of tax payments by withholders as this is a withholding type of tax paid to the commissioner by a withholding agent, it explained.

CSOs must comply with the payment of stamp duty on an instrument executed in Tanzania or outside Tanzania Mainland but related to any property, or any matter to be performed in Tanzania Mainland and this is to be done within 30 days from signing that instrument, it stated.

TRA senior official Feliciana Nkane said at the launch that CSOs need to join hands with TRA and other stakeholders in educating community members on tax compliance so as to ease the revenue collection task and serve the entire community.

Tasking them with being TRA ambassadors, she said that if people will pay taxes without being forced, “we are also going to spend less on tax administration.

Onesmo Olengurumwa, the national coordinator for the Tanzania Human Rights Defenders Coalition, expressed the hope that the simplified toolkit offers solutions for existing challenges facing both parties, thus strengthening collaboration.

“We expect that relationship between TRA officials across the country and CSOs be enhanced, optimizing CSOs tax compliance,” he added. 

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