Tanzania: TRA Moves to Tame Fuel Tax Cheats

21 March 2015
The Tanzania Revenue Authority (TRA) is on its final trials before fixing Electronic Fiscal Devices (EFDs) at all fuel pumps, in a move aimed to improve collection of tax. The taxman said initial trials conducted for almost a year at Engen’s pump stations has shown positive results not only to the authority but to the firm on maximising revenue. The TRA Principal Officer, Mr Hamis Said Lupenja, said the trials would go on for the next few months until all discrepancies are sorted out before the procedure was formally implemented in other filling stations.
“We want to perfect the performance of the machines and devices prior to the stakeholders’ approval,” Mr Lupenja told the ‘Daily News’ at TRA headquarters on Monday.
Information from reliable source within TRA had it that the device had been specifically designed for petrol stations.
“It (device) cannot refill another car if it issues receipt to the previous car. We’re optimistic of collecting a huge sum from this system,” the source said.
Mr Lupenja said TRA’s previous directive for filling stations to use normal EFD failed, because motorists as other traders, have no culture of demanding receipts.
“We shop around and come up with the idea of fixing the EFD at the pumps. In this once a pump attendant makes a delivery it is automatically registered on TRA computers, the taxed amount,” Mr Lupenja said. “With this device, installed inside the pump, it will not matter whether a motorist demands a receipt or not, the tax is automatically collected.”
Though, he said, it is an offence to buy anything without demanding a receipt and the buyer is liable to a penalty of 1.0m/- while a trader is fined 3.0m/-.

Nevertheless, the TRA Officer said the move was part of the Authority’s second phase of expanding EFD users’ bracket to non-VAT traders. In the coming phase to be launched mid next month 200,000 traders are targeted. The traders eyed those with their annual business return which is 14m/- and above, but for filling stations it will be applicable even if their stations are selling below the prescribed figure. According to TRA, the service has been well received by Engen as it assists them on recording the right sales to gauge out any element of fuel pilferage.

“But we will continue with the trial run until all stakeholders’ doubts are addressed,” he said.
The stakeholders include Tanzania Bureau of Standard, Weigh and Measure Authority, as well as oil dealers. The same system of refunding EFD traders will be extended to the filling station owners where they bought the device and they’ll be repaid during the sales processing.

Since the introduction of EFDs 2010 positive achievement were recorded on tax collection from VAT docket as its revenue increased by over 23 per cent in the said period.

“I don’t have a figure with me, but it’s more than billions of shillings,” Mr Lupenja said. The statistics department is working on the numbers.”“
The Bank of Tanzania data shows that TRA collected 864.9bn/- in December last year and exceeded target by 4.4 per cent compared to the previous month. The main challenge the taxmen are facing is awareness as advantages of EFDs are in three dimensions — trader, customer and the public — on issuing and demanding the receipts after every purchase. Engen Petroleum Tanzania was founded in 1996 when Engen Petroleum Limited purchased the Kurasini Terminal, Isaka Depot and Kigoma Depot from Bulk Oil Ltd.