Questions over new ultimatum for tax 'evaders'

11Feb 2016
Our Reporter
Dar es Salaam
The Guardian
Questions over new ultimatum for tax 'evaders'

THE government has issued a new ultimatum for local businessmen to pay close to 19 billion shillings allegedly swindled through some 329 shipping containers being cleared from the Dar es Salaam port without the relevant taxes being paid.

WB Panelist, Indire Santos (l) speaks at the launch of the development report on digital dividends.

However, critics have said the defaulters should instead be prosecuted for tax evasion instead of being given more time to pay up, to act as an effective deterrent to such law breakers in future.

The Tanzania Revenue Authority (TRA) has hired the services of a private debt collector to recover 18.947bn/- from 24 companies and individuals which own the containers and are therefore linked to the now infamous scandal.

Working under TRA instructions, the debt collector, Yono Auction Mart & Co. Ltd, has in turn given the alleged tax swindlers 14 days effective from yesterday to pay the due taxes or face legal action.

Initially, back in December, the businessmen were given one week by President John Magufuli himself to pay up or face the consequences.

But only part of the money has been recovered so far, leading to the TRA move to call in a formal debt collector.

Some opposition party leaders told The Guardian that the government was being too cozy with the alleged tax swindlers by giving them an extended grace period at this time.

Former Civic United Front (CUF) national chairman Prof. Ibrahim Lipumba said it was important for all laws and procedures to be strictly followed when dealing with tax evasion matters.

He pointed out that issues related to government revenue involve legal procedures as stipulated in the appropriate tax laws.

“If such procedures are not observed, it is difficult for government directives to be executed …the government should be careful when issuing orders by making due reference to the laws and assess the possibilities of their implementation and implications,” Prof Lipumba said.

He noted that the failure by defaulters to heed to the first ultimatum issued by the president himself last year, and the subsequent government action to award them another two-week grace period, pointed to fundamental weaknesses on the side of the government.

The Yono Auction Mart statement issued yesterday said: "(We) hereby issue a 14 days notice for immediate payment of taxes and penalties together with costs and charges as a result of assisting in countering tax evasion in respect of 329 containers which were removed from Azam ICD without following proper procedures and thus denying the government its due revenue.”

"Further take notice that should you fail, refuse and/or neglect to heed to the demands ... we are under firm instructions to take all necessary measures cum attachment of the said properties and confiscate the same and/or take you to a court of law in order to obtain redress for our client (TRA)."

The debt collection agency tasked the Dar es Salaam-based Said Salim Bakhresa & Co Ltd, the parent company of the Azam Inland Container Depot (ICD) where most of the shipping containers vanished in thin air, to "see that such outstanding taxes, import duties and other dues are paid by defaulters within the given period of 14 days."

The statement listed all 24 alleged culprits, among them some prominent import trade companies and individual businessmen, all of them linked to the alleged tax evasion involving shipping containers.

One company that deals with the business of importing motor vehicle tires is alleged to have evaded government taxes worth over 7.4bn/- in container shipments.

Big, formally registered local companies are the government’s main source of taxes mainly due to the presence of a huge informal economy.

President Magufuli last year sacked several high-ranking government officials over the shipping container scandal. They included the director general of the Tanzania Ports Authority (TPA), Awadhi Massawe, and the TRA commissioner general Rished Bade.

Meanwhile, reports said late yesterday that the TPA has suspended over 200 local clearing and forwarding companies from operating in the port area, due to outstanding debts and other irregularities.