New Changes in the Tax Administration Act

The Tax Administration Act has undergone significant amendments aimed at improving tax compliance, addressing taxpayer concerns, and ensuring smoother operations within Tanzania’s tax landscape. These changes introduce measures ranging from the establishment of a Tax Ombudsman to the adjustment of penalty rates and new provisions for storing electronic information. Here’s what you need to know:

1. Introduction of the Tax Ombudsman Office

As part of the 2023/24 budget, the establishment of a Tax Ombudsman Office has been proposed. This office will be tasked with addressing taxpayer complaints related to service delivery, procedural issues, and administrative matters that arise during the implementation of tax laws. The primary objective is to create a fairer environment for taxpayers, helping to resolve issues such as corruption, arbitrary assessments, and unjust business closures. By providing an independent channel for complaints, the Tax Ombudsman aims to enhance transparency and build trust in the tax administration process.

2. Amendment of Penalty Rates for EFD Offenses

The Act has also revised penalties related to the use of Electronic Fiscal Devices (EFDs). Specifically, Section 86(1) has been amended to lower the penalty rate for failing to issue receipts or use an EFD. The penalty has been reduced from a currency point of 300 (equivalent to TSh 4,500,000) to a currency point of 200 (equivalent to TSh 3,000,000) or 20% of the evaded tax amount, whichever is higher. Similarly, the penalty for failing to demand receipts or report instances of non-issuance has been reduced from a currency point of 200 (TSh 3,000,000) to a currency point of 100 (TSh 1,500,000) or 20% of the evaded tax amount, whichever is higher. These reductions are aimed at creating a more proportionate penalty system while still encouraging compliance.

3. Storage of Electronic Information

An amendment to Section 35 of the Tax Administration Act introduces a clearer definition of “primary data server,” now encompassing actual servers located within Tanzania, virtual servers, or any other specialized devices for storing electronic taxpayer information. This change is expected to lower the cost of installing servers within the country while ensuring that vital electronic data remains accessible when needed. The measure is set to take effect on January 1, 2024, and marks a step toward modernizing data storage practices to better support businesses and tax administration.