Tanzania: TRA Reveals Traders' New Methods of Tax Evasion

By Rosemary Mirondo

Dar es Salaam — Some business owners have come up with new ways of evading tax, The Citizen can confirm.

One of the tactics is to convince customers not to claim receipts in return for price discounts.

A survey conducted by The Citizen in Dar es Salaam has established that the newest approach was to entice customers with price discounts and ask them not to claim electronic receipts.

This move has been taken after other tax evasion loopholes were known by TRA including issuance of electronic fiscal devices (EFDs) receipts with less amount than the actual figure, issuance of fake receipts from machines not registered with the TRA.

Following TRA measure to curb such misdeed, The Citizen discovered that not only in Kariakoo, but also the city centre and various other areas.

Reports show that TRA recorded Sh1.767 trillion collections in September this year, as a result of strengthened collection systems, including tight monitoring of the use of EFDs.

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The taxman was required to collect a total of Sh19.1 trillion - an average of Sh1.59 trillion a month - to partly finance country's Sh33.1 trillion budget.

However during the first quarter of this financial year, Sh4.432 trillion collected, with a record Sh1.767 trillion being garnered in September alone.

Despite TRA efforts, it came to The Citizen attention that some customers who were receptive to their mode of tax evasion would be issued with a receipt for goods purchased be it a television set, phone, fridge, cooker just to take home the equipment.

They would then be required to bring back the receipt and be given a small token of appreciation which could amount to Sh20,000 or more.

The essence of issuing the receipt is to protect the buyer from TRA officials, who might be on alert of newly purchased equipment without receipt.

On the other hand, the shops would bargain with their customers for a discount which would go as far as Sh100,000, so that they would not demand for an EFD receipt.

In one of the shops, the trader went as far us to tell this reporter to wait outside the shop and the equipment would be taken to them with a warranty but minus an EFD machine.

Another shop was ready to transport the equipment to the customer's house in order to ensure they did not encounter TRA officials because for them they had an alibi of telling the revenue collector officials that they were taking the goods to another store.

Reached for comment, Tanzania Business Community secretary-general, Abdallah Mwinyi, said he was not aware of such an act and stressed that the community's position was for traders to issue receipts that is worth the amount of the equipment purchased.

"We do not condone such behaviour, but some traders are forced to use such tactics to compensate huge amounts that they incur at the customs," he said.

Elaborating, he said the customs act valuation and operation has raised concern over the way it was being managed causing businesses to incur great costs when removing goods at the port.

He noted that they have virtually talked to all relevant ministry officials including, Ministry of Finance and Economic Affairs, Ministry of Trade, Industry and Investment, ministry of Works, Transport and communication as well as TRA themselves but no resolution had been reached.

TRA board chairman Suleiman Misango said it was imperative the public demand for an EFD receipt after any purchase because it was their right.

"The country can only develop, if taxes are paid and if the public allowed traders to find loopholes, at the end of the day, the government was not the only loser, but the nation as a whole," he stressed.

TRA acting director of taxpayer services and education Richard Kayombo said it had come to their attention that traders had come up with new inventions for tax evasion.

"We will always be a step ahead of them to ensure that we learn all their new tactics, because there will be no negotiations over tax payments, everybody must pay for the good of the country," he said.

He said TRA has put up an officer in strategic locations to intercept goods that are being transported illegally without receipts.

He noted that they have put up surveillance in inspection centers located in all highways including Dar es Salaam, Dodoma, Msata, Mkuranga and others to ensure all goods passing having genuine EFD receipts.

Explaining, he said they goods must have a receipt for transportation of goods otherwise they would be arrested and liable to a fine of between Sh3 million and Sh4.5 million or jail term.

Further he noted that they were aware that there were traders selling the same receipt to a number of customers to avoid issuing receipt when goods are purchased.

He said stern measures will be taken against the trader and customer when discovered invading tax payment.

On another note, he said TRA was still conducting awareness programmes to the public on the importance of paying taxes.