TAX AND CORPORATE LAW UPDATE: INTRODUCTION OF ELECTRONIC FILING (e-Filing) OF TAX RETURNS IN TANZANIA BY THE TANZANIA REVENUE AUTHORITY (TRA)

• The Tax Revenue Authority (TRA) has transitioned its tax returns filing system from the manual filing system to the new electronic filing system
• The process of filing tax returns electronically.
• Consequences of failure to electronically file the returns on time.

1.0 Introduction

The Tax Revenue Authority (TRA) in Tanzania has issued directives regarding its newly introduced tax returns filing system from the old manual filing system to an improved electronic filing system (e-filing). This new e-filing system is set to be effective from August 2020.

All individuals and entities in Tanzania are required to file their tax returns through the electronic filing system before making any payments.

Our Tax Department and Corporate Commercial Departments have jointly prepared this note to brief corporates and individuals alike, on the requirement to prepare and submit their tax returns electronically and consequences of failure to submit on time.

2.0 The e-Filing Tax Returns System

The filing of tax returns is now made through electronic system, to wit, e-Filing system therefore, users can access the system wherever they are.

In order for the user to register into the system, an individual must possess a Tax Identification Number (TIN) that has been registered for business purposes. As for corporate bodies (companies, NGOs, Partnerships etc.), a TIN for the Director or Representative will be required. The e-filer will use the TIN and a generated password as log-in details at all times.

Aside from filing tax returns, the e-filing system provides a buffet of tax type assessments for various filed returns and enables users to select the said assessments and make direct payments without login into a separate portal for payment.

When filing through the e-filing system, corporate bodies are required to do the following;-

1. Register the business to the TRA’s Portal using the business’s TIN.
2. Ensure that every employee has a TIN. For those employees with no TIN, they may register for the number online by using their National Identification Number (NIDA) whereas for the non-citizens working in the country, they ought to use 999-999-999 as their respective TIN.
3. Appoint a Declarant.
   Please note that an entity can appoint more than one declarant and can subsequently remove the appointed declarant at any time.
4. Appoint an Audit firm.

In order to fulfill the requirement of certification of returns of income (for business entities), an e-filer must appoint an Audit Firm. This appointed auditor must be registered under the National Board of Accountants and Auditors of Tanzania in the category of Certified Public Accountants in Public Practice. It must also have a TIN registered in Tanzania.

3.0 The electronic filing process

With the above information, the e-filer can start filing the tax returns into the e-filing system. There are three stages to complete the filing.

1. First stage: Populating the respective tax returns to be filed into the system.
   The e-filer needs to populate (fill in) the tax returns in the e-filing system. For returns other than returns of income, a separate screen will appear indicating return type, year of return, month of return and an option to choose the respective file. 
   
2. Second stage: Uploading the return that has been filed with all required information.
   The e-filing system enables users to preview the uploaded file for confirmation as to whether the uploaded files are correct. One will be prompted to make a declaration of the filed tax returns filed before the final submission.When filing returns for income, the returns will firstly be submitted to the Audit Firm for certification. After the Audit Firm certifies the tax returns, they will be sent back to the e-filer where one will be required to review and submit the certified tax returns to TRA.
3. Third stage: Getting transaction reference number.
   After a successful submission, a transaction reference number will be generated automatically and there shall be a change in the status reading “data successfully processed” indicating the completeness of filing of the tax returns.

   Once the tax returns have been filed and processed successfully by the TRA, a copy of Acknowledgement of Receipt of Return and Assessment shall be generated against such a return. Whereas for business entities, a copy of TRA’s Acknowledgement of Return, Submitted Return and Assessment shall be automatically generated against the said return.

4.0 Consequences of failure to file and submit the tax returns through the e-filing system.

Entities are given a period of one month to ensure they transition from the manual filing system and file their tax returns through the e-filling system; bearing in mind that this notice is effective from August 2020.

Any business that fails to comply with filing requirement by the 7^th of September 2020 shall be penalized and incur interests which are automatically generated by the system.

5.0 Our Experts’ Take

The e-filing system will simplify return filings and make it more efficient and appealing for businesses to file their tax returns in an easier way with less bureaucracy. This online development will help streamline the procedures and assist businesses to file their tax returns within a shorter period of time compared to the manual filing system.

Breakthrough Attorneys commends TRA’s dedication to cater to its people through incorporating the development of Information and Communication Technology. On the other hand, we call for public education programs to be issued by TRA so that users can be able to access and utilize the system swiftly. Likewise, we call upon the taxpayers to abide and adhere to these changes timely so as to avoid unnecessary penalties and filing complications.

 

Important Notice:

This publication has been prepared for information purposes only, and it does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, Breakthrough Attorneys, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.