Background

On 06 August 2020, Tanzania Revenue Authority (TRA) introduced an online e-filing system for tax returns “e-filing portal”. Before introduction of the e-filing system, taxpayers were filing the Value Added Tax (VAT) returns online and generate control order form for payment of taxes.

Indeed, the new gateway/portal for filing the tax returns developed by the Revenue Authority has a number of advantages such as:

  • The system enables submission of tax returns directly through a web platform which simplifies the process, making it swift and cost-efficient;
  • The system also enables issuance of self-assessments to the taxpayer immediately upon filing of the return. Prior to introduction of the system, taxpayers had to manually follow up for the assessments and the return filed was construed as the self-assessment return. The assessment issued by the portal makes it clear to the taxpayer of the data captured by the system;
  • Dashboard which summarises the filing status of the returns by the taxpayers and indicates the next return due;
  • Integrated payment gateway i.e. “Payment Registration Gateway” which integrates payment to the debit number issued upon filing of the return. This has indeed reduced challenges faced during reconciliation of the tax account.

While efforts by the Authority are commendable, there are a few challenges which need to take into consideration:

  1. When issuing the self-assessments, the system does not capture tax suffered by way of withholding tax declared on the return of income.  This has also resulted to incorrect computation of interest on deemed under-estimation of provisional tax.
  2. Instances have also been noted whereby the original/revised provisional SETPs which were filed manually are not mapped to the e-filing portal, resulting in incorrect tax position when assessment is issued.
  3. Restriction of 10MB has been set for each document to be uploaded on the e-filing portal i.e. the signed financial statements, detailed tax computation and TP documentation. This has turned out to be challenging for taxpayers with bulky files especially where the financial statements are prepared under full IFRS and Transfer Pricing Document has to be submitted with the Returns.
  4. Onboarding taxpayer on e-filing where an update is required on the directors/local representative details has turned out to be a time-consuming task which delays the process of submitting the returns and paying the taxes timely.

Way forward:

  1. Where withholding tax suffered is declared on the return of income and the same is not reflected on the assessment, it is important to keep records of all the withholding tax certificates and notify the Authority immediately upon filing of the return vide a letter or an objection.
  2. Ensure all manually filed statements of estimates/revised estimates of tax returns “SETPs” are mapped to the e-filing portal. Taxpayers should review their tax position in terms of the provisional tax on the “Filed Returns” section of the portal to ensure the instalment tax is correctly captured.

Items to be considered by the Authority for the next update:

  1. One key item to be considered by the Authority in the next update would be to allow the taxpayers to view their tax account as per the TRA system. This will reduce the uncertainties on demand notices and allow taxpayers to provide any clarification on outstanding balances which may be due to several reasons such as errors on data entry.
  2. Capture the withholding tax declared by the taxpayer or integrate the withholding tax credit as per the withholding tax gateway in order to avoid disputes and administration time spent on correction of assessments.
  3. Allow the taxpayers to update the details of the director/local representative and address online.
  4. Application of tax clearance online would be another point to be considered during the next update.

Conclusion

We understand that the Authority is aware of the challenges on the system and is working to advance the same to mitigate the above challenges. It is important to adhere to the user guidelines provided by the Revenue Authority and always notify the e-filing team of the Authority, should you require clarification or encounter any challenge during the application of the portal.