a remarks on selected tax policy and administration interventions at the ceo roundtable (ceort)

TANZANIA REVENUE AUTHORITYTANZANIA REVENUE AUTHORITYTRATRA

1

A REMARKS ON SELECTED TAX POLICY AND A REMARKS ON SELECTED TAX POLICY AND ADMINISTRATION INTERVENTIONS AT THE ADMINISTRATION INTERVENTIONS AT THE CEO

ROUNDTABLE (CEOrt)

Hyatt Regency Dar es Salaam.

Harry M. KitillyaHarry M. KitillyaNovember 2013November 2013


1.0 TRA 4TH CORPORATE PLAN

2.0 TRA CP4 COMPLIANCE MANAGEMENT SCHEME

3.0 COLLABORATION WITH PRIVATE SECTOR

4.0 ENGAGING THE SMALL ENTERPRISES

5.0 COUNTER-PRODUCTIVENESS OF NEW TAXES

6.0 CHALLENGES AND OPPORTUNITIES AS

TANZANIA MOVES INTO GAS ECONOMY

7.0 ADDITIONAL MATTERS RELEVANT TO THE PRIVATE SECTOR

8.0 CONCLUSION

SCOPE


2.0 TRA 4th Corporate Plan

TRA has matured from a tax administration that

provides tax type services for revenue collection to

an efficient organization that delivers one stop

shop services for all types of taxes

The TRA operations are guided by Fiver-Year

Corporate Plans and we are now implementing the

fourth Plan 2013/14-2017/18 (CP4).


2.0 Fourth Corporate Plan Overview

The CP4 is built on achievements gained in CP3 and the desire to address challenges for continual improvement

The strategic focus of the Fourth Corporate Plan is summarised in its Vision, Mission and Core Values.


2.0 Fourth Corporate Plan Overview cont’dMission, Vision, Core ValuesVision:

“To Increase revenue to GDP ratio to 19.9% by 2018” Improve efficiency Widen the tax net: (informal sector, specialized sectors – mining, oil, gas

telecom, tourism, construction, real estate, financial sector)

Mission Statement:

“We make it easy to pay tax and make lives better” Ensure simplified and transparent processes Easy access to services Increased compliance hence Increased revenue collection

Core Values: Accountability – organisation that values and promotes accountability Integrity – fair and honest in dealings with stakeholders Professionalism – apply law fairly and consistently using our knowledge


2.0 Fourth Corporate Plan Overview cont’dStrategic Themes: common direction to achieve objectivesConvenience:

Deliver cost efficient, consistent and reliable taxpayer services Streamlining of processes; automation; self service options

* Req: A culture and practice of efficiency, transparency & accountability

Compliance: Taxpayer segmentation for optimal resource allocation based on risk Comprehensive taxpayer compliance strategy; service & education

pgms

* Req: A culture of high quality service delivery

Continual Improvement: TRA is a dynamic organisation, always changing for the better New ideas, innovation, sharing of information to improve

performance

* Req: A culture that is receptive to change


2.0 Fourth Corporate Plan Overview cont’dStrategic Objectives

.

Perspective Strategic Objectives

Financial 1. Improve operational efficiency2. Increase domestic revenue contribution

Customer 1. To be a prompt, technology enabled proactive partner Process 1. Simplify registration, assessment and payment to increase self-service.

2. Promote prompt clearance to improve trade facilitation3. Enable administrative and policy improvement 4. Drive effectiveness in collection and accounting, audit and

investigation, objections5. Promote segment focused education and service to drive voluntary

compliance

Learning & Innovation

1. Improve strategic Human resource capacity2. Develop culture that drives performance, innovation, collaboration and

leadership3. Increase ICT outreach and availability4. Enhance good governance capability


2.1 BALANCED PERSPECTIVES – Cause & Effect

Financial

“If we succeed, how will we look to our stakeholders?”

Customer

“To achieve our vision, how must we look to our taxpayers?”

Process

“To satisfy our taxpayers, at which processes must

we excel?”

Learning & Innovation

“To achieve our vision, how must TRA learn & improve?”

TRA CP4

CAUSE

EFFECT


..

TRA FOURTH CORPORATE PLAN STRATEGIC MAP

VISION: TO INCREASE REVENUE TO GDP RATIO 19.9% BY 2018

MISSION: WE MAKE IT EASY TO PAY TAX AND MAKE LIVES BETTER

FINANCIAL PERSPECTIVE

1. Improve operational efficiency

2. Increase domestic revenue contribution

CUSTOMER PERSPECTIVE

To be a prompt, technology enabled proactive partner.

INTERNAL PROCESS PERSPECTIVE 1. Simplify registration, assessment and

payment to increase self-service. 2. Promote prompt clearance to improve trade

facilitation 3. Enable administrative and policy

improvement 4. Drive effectiveness in collection and

accounting, audit and investigation, objections

5. Promote segment focused education and service to drive voluntary compliance.

LEARNING & INNOVATION PERSPECTIVE

1. Improve strategic Human resource capacity

2. Develop culture that drives performance, innovation, collaboration and leadership

3. Increase ICT outreach and availability

4. Enhance good governance capability

CORE VALUES: ACCOUNTABILITY, INTEGRITY AND PROFESSIONALISM

THEME: CONVENIENCE, COMPLIANCE AND CONTINUAL IMPROVEMENT

MILLENIUM DEVELOPMENT

GOALS

FIVE YEAR DEVELOPMENT

PLAN

MKUKUTA II

NATIONAL VISION 2025

MKUZA II KILIMO KWANZA

9


Willing to Comply

Trying to Comply

Do not Comply

Decided not to Comply

Use Enforcement Strategy

Deter by Detection

Help to Comply

Make it easy

Strategy ResponseTaxpayer Behavior

Le

vels

of

Co

mp

lian

ce

Level 1: Willing to ComplyCP4 Theme: ConvenienceDifferentiated Service OfferingAutomation and Self Service EnvironmentMove from Gate Keeper to Risk Manager

Level 2: Trying to ComplyCP4 Theme: ComplianceTaxpayer EducationReduce Administrative BurdenUnderstand the taxpayer business and advise

Level 3: Do not ComplyCP4 Theme: Continue Improvement360 View: Holistic view leading to early detectionEmpower our people with tools to perform at their peak Use of 3rd party data to uncover non complianceRoutine Audits

Level 4: Decided not to ComplyReferral to Tax investigationUse of the strongest arm of the lawReferral to other law enforcement

The Strategy

2.2 Developing Compliance Programme…

Registration

FilingDeclarationPayment

Areas of Compliance


3.0 Collaboration with Private Sector

Provision of quality service and building workable partnership with the taxpayers has been an ultimate goal of TRA’s major reforms


3.0 Collaboration with Private Sector cont’d Interventions taken to institute a tax administration that

collects Government revenue efficiently and effectively includes,

Introduction of One-Stop Centers and self-assessment system

Introduction of electronic lodgments of customs entries and tax returns;

Electronic payments of taxes through ASYBANK and mobile phones;

Introduction of Taxpayer Service Centers in Dar es Salaam Tax Regions; Implementation of Customs Post clearance Audit; Trade

facilitation reduction of clearance time on imports; Establishment of One Stop Border Posts


TRA has developed a Taxpayers’ Charter,

TRA also undertakes Taxpayers’ Perception

Survey and Stakeholders’ Forum,

A call center is now fully operational The commitment of TRA to ensure inclusiveness is articulated in its fourth five-year Corporate Plan

3.0 Collaboration with Private Sector cont’d


4.0 Engaging the Small Enterprises Small businesses are not major source of revenue

for governments. MSEs in Tanzania account 61 percent of the

taxpayer population and generates less than 2 percent of total domestic taxes.

Small business taxation is instrumental to facilitating MSEs’ participation in the formal economy

Presumptive taxation is the most appropriate method of tax administration for specific small business due to inability to comply with complicated tax statutes


4.0 Engaging the Small Enterprises cont’d

In Tanzania, the presumptive income tax was first introduced on July 1, 2000 as means to pull the informal sector in the tax net. Firstly, to reach out to those not reachable through the

formal Personal Income Tax (PIT)

Secondly, to institute in-built attributes to motivate

operators under the Presumptive Scheme to graduate into

the preferred tax system.


4.0 Engaging the Small Enterprises cont’d

TRA is implementing the Block Management System, (BMS). Tax Officers, from compliance and enforcement sections have been allocated toTo registering all traders within the blocks, To collect all types of taxes and manage tax debts To provide taxpayer services Focus in CP4 on Formalization of the Informal Sector

benefit from the enhanced identification of persons that the National IDs will embed.

Strengthen Block Management System Continual improvement in presumptive taxation scheme


5.0 Counter-Productiveness of New Taxes

The Tanzania Revenue Authority Act, Cap 299 established the TRA as a central board to assess, collect and account for all Central Government revenue and administer and give effect to the laws relating to such revenue.

The main mandate of the Tanzania Revenue Authority is not tax policy formulation, but tax policy implementation.

TRA is an advisor of the Ministry of Finance on fiscal policy through the Tanzania Revenue Authority’s Board.


5.0 Counter-Productiveness of New Taxes cont’d TRA’s advice on tax policy is implemented through

consultative processes and passes through the Task Force on tax policy reform, whose representation includes the private sector.

The rationale behind the introduction of three most contested reforms, namely withholding tax on services, excise duty on telecommunication SIM Card and Excise Duty on money transfer was in essence to increase Government revenue to finance the provision of social services.

Two of the reforms are in the courts of law and it probably a wise idea for me not to continue putting opinions on it.


6.0 Challenges and Opportunities as Tanzania moves into Gas Economy The discovered reserves of gas are likely to place

Tanzanian economy to higher levels of development than it is now.

The country need it for power generation and

revenue to bridge the budget gap

Currently Tanzania does not have specific tax

regime for oil and gas rather it uses existing

tax laws to tax the oil and gas industry


Since Oil and gas is a relatively new venture, Tanzania is faced with a number of challenges including.

Putting in place a modern regulatory and taxation framework for the industry to be sustainable.

Currently the industry is dominated by foreign experienced companies with high level technology and long-standing experience in the industry including tax planning

Overcoming these challenges will have a significant bearing for Tanzanians to realize the benefits of their

natural resources for their development.

6.0 Challenges and Opportunities as Tanzania moves into Gas Economy cont’d


Additional Matters Those Are Topical and Relevant to the Private Sector

This is such a grey area and the list may be endless. I would like to mentions just one or two issues of interest

We are rewriting the VAT Law with the intentions to align it with international best practice.

The Government also expects to enact the Tax Administration Act, which harmonizes in one book all the administrative codes and procedures


CONCLUSION

As for the Tanzania Revenue Authority, I wish, on my own behalf and on TRA’s behalf, to assure you that we are committed to creating a workable partnership with the private sector in revenue administration, and your inputs towards achieving this commitment together are most welcome and most valued.


Thank you once again for giving me an opportunity to speak at this roundtable dialogue.

a remarks on selected tax policy and administration interventions at the ceo roundtable (ceort)

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