5pc withholding tax increases burden, TRA told

Minister for Finance William Mgimwa 

By  Alawi Masare 

In Summary

• Ernst & Young paid back $125 to its clients after the training but a number of people left without getting the $5.

Dar es Salaam. Taxpayers are concerned about the newly introduced withholding tax on services, saying it is inconvenient and increases administrative burden on them.

Speaking during the Ernst & Young Finance Act 2013 training at a city hotel yesterday, Ernst & Young clients said administration of the 5 per cent service fees charged on every payment is a problem.

“We see this as another administrative burden bearing in mind that whatever you pay, regardless of the amount, you need to withhold 5 per cent and remit it to Tanzania Revenue Authority,” said Gilbert Zannie, tax and treasury consultant at Coca-Cola Kwanza. The tax was introduced in 2013 effective July 1 as stipulated in the finance act. It did not specify the kind of services and the amount (threshold) to be charged.

Ernst & Young paid back $125 to its clients after the training but a number of people left without getting the $5.

“We are following the rules but it is hectic to pay this ridiculous amount to our clients.it’s extremely an administrative burden. It just doesn’t make sense…there is neither threshold nor exemptions,” remarked Silke Mattern, Partner, International Tax East Africa at Ernst & Young.

She said the process of charging it, remitting to TRA and issuing certificates consumes a lot of time that they need to employ a person who will deal with it alone.

“We have it back home in Ghana. However, the issue here is its administration. It’s very cumbersome from collecting to remitting it to the revenue authority and issuing certificates,” said Alex Ankomah, finance manager at Advans Bank Tanzania.