Inconsistent tax collection policy crippling businesses in Tanzania

Tax collection, policy unpredictability and bureaucracy has been identified as the major business bummers in Tanzania, which has also had a ripple effect on the country’s economy, stated former chairman of the Business Community Association Johnson Minja.

Minja argued that registered businesses in the East African country are burdened with tax payment to uphold the economy of the nation. Hence, mounting pressures impede the growth of such businesses, especially start-ups, as the Government requires an unfavourable amount of money in form of tax.

Minja called for “the Parliament to widen the tax base to prevent this mode of harassing of businesses that could discourage the businesses and lead to their closure.” To attain a stable economy, the government should be consistent in its policies, as this will boost business confidence and encourage all-important process of job creation and investment.

He warned that shifting burden to a few Tanzanians who have registered their businesses and companies, which have dedicated to paying taxes, may result into scaring away investors. The need for a wider tax base, he argued, would be ideal in promoting the growth of businesses and progress of the economy, with a high potential of heaping taxes from different avenues.

Tanzania’s tax revenues rose 12.7 percent in the first half of this fiscal year from the same period a year ago as collection improved, the Tanzania Revenue Authority (TRA) confirmed.

A study, Attitude Towards Tax Compliance among SME’s in Tanzania revealed that tax payers face several hurdles including poor skills and knowledge about tax; multiple taxation; cumbersome records and reporting procedures; stiff competition; timing for payments; and inapt tax officers’ behaviours.

To this regard, there is need for policy consistency that sync with the dynamism of the business environment and offer profits to both parties, lest Policy unpredictability scare off investors who seek long term assurance of investments in the East African country.