Tanzania: Mwanza traders condemn TRA

 

2 January 2014

Shops and other businesses in the city of Mwanza have reopened after three days of strike in a protest over what traders described as government institutions’ discrimination and ill-treatment of business people generally. The Mwanza Regional Administrative Secretary (RAS), Mr Ndallo Kulijila, told the ‘Daily News’ that the unrest came to an end after the Mwanza Regional Commissioner (RC) Eng. Evarist Ndikilo, met the businessmen and discussed their grievances.

“The RC and businessmen’s representatives sat in a meeting from 2:00 pm and concluded it at 20:00 pm. They discussed various factors that the business people viewed as impediments to their businesses and found a lasting solution,” said Kulijila.

 

He said that the major concern of the businessmen was the way TRA handles issue of the electronic Fiscal Device (EFDs). Most of the business people complained bitterly saying that they did not know for what use the gadgets were. Some said they did not know how to use them.
 
They asked the Regional Commissioner to instruct the TRA and its agencies to enlighten the business people on how to use the machines. According to the RAS, the business people also complained that some TRA officers often threatened them instead of using a friendly approach when discussing taxation matters. The other complaint from the business people was that when a trader pays import duty at Sirari on the Kenyan border, the same trader pays the same duty at Musoma and Mwanza.
 
This means some traders paid import duty for the same goods three times. Responding to the business people’s grievances, the Regional Commissioner ordered the TRA in Mwanza to provide education on the use of EFDs and instruct its members of staff not to threaten traders use a gentle public relations approach when dealing with them.
 
 
Source: Tanzania Daily News

Tanzania: Tax Device Imports ‘Questionable’

 

6 January 2014

As the Treasury plans to register more than 200,000 new Electronic Fiscal Device (EFD) holders this year, the gadgets may soon be blocked by court action following a query by Tanzania Taxpayers’ Association. Among other things TTA is questioning legitimacy of a contract signed between Tanzania Revenue Authority (TRA) and the gadgets’ manufacturers and distributors. The taxpayers’ association Chairman, Otieno Igogo said in Dar es Salaam that the deal signed between TRA and two Bulgarian and Italian based firms raises more questions than answers, hence may be forced to seek the court’s interpretation of the laws governing tax collection.

“This whole contract is questionable, first because there is no record of a competitive tender having being floated then there is the issue of monopoly granted to these firms and their distributors which is contrary to our laws,” Mr Igogo argued.
 

He said a cartel of local and foreign firms backed by TRA are unfairly imposing hiked prices for the gadgets while businesses are being forced to lend more than 91bn/- to the revenue body without being paid interest, but also forcing EFD registered users to get services and accessories from the same cartel.

“For example, businesses are forced to buy paper rolls for use with the devices from accredited distributors at 16,000/- each while in the local market the same can be bought for 1,000/-,” he revealed while questioning quality of the paper which gets erased in 30 days.
 

But TRA acting Commissioner General, Rished Bade dismissed much of the TTA Chairman’s arguments saying it does not reflect reality.

“The paper roll’s restrictions are due to quality as this does not get erased but the price is also much lower,” Mr Bade argued. He further noted that the 500,000/- service fees is not applicable as distributors are required to maintain the machines for a whole year as per the terms of the signed contract with TRA.
 

Bade also noted that the issue of raising the threshold is not TRA’s responsibility hence advised TTA to face policy makers. Igogo also said apart from paying close to 800,000/- cash to acquire the EFD gadget through distributors and not TRA or any other government agent which is then remitted to the manufacturer abroad who doesn’t pay local taxes.

“This whole contract raised several serious questions which should force the government to suspend phase II of the roll out project and examine this contract which will drive many small and medium scale businesses out of business,” he argued.

 

Meanwhile, the Treasury has warned that come February 1, 2014 all defaulters will start facing legal penalties which include a possible 12 months jail term upon conviction by the courts of law. The ‘Daily News’ investigations have established that there is still resistance by businesses to acquire the gadgets which Treasury argues will help increase government revenue, get rid of corruption by tax collectors and do away with estimations. The TTA Chairman further questioned the 14m/- threshold annual turnover as qualification for one to be required compulsorily to acquire the EFD machines whose prices peaks over 800,000/-.

“This move will drive out of business many small scale businesses because the burden of paying for the EFD machine is unbearable,” Mr Igogo argued while suggesting that the minimum threshold should be pegged at 20m/- turnover per annum. 

“Many small scale businesses have 14m/- turnover annually which if we take into consideration 30 per cent profit recognized by the Income Tax Act, we get 9.8m/- which translates to 816,000/- as starting capital and this is what the EFD costs,” argued Igogo who is the immediate former President of Tanzania Freight Forwarders Association (TAFFA).

 

TRA contracted Italian based Customs Engineering SPA and RCH-SPA and two Bulgarian based Datecs Ltd and Incotax Systems Ltd to manufacture the tailor made EFD machines, which were first introduced in 2010 and so far more than 16,000 value added tax payers acquired at a hefty price of 2m/- each. The number of distributors has increased from two, BMTL Limited and Total Fiscal Solutions Limited as sole distributors before the list was further increased to current 11 countrywide with prices falling to between 600,000/- and 778,377/- each depending on model and make.
 
 
Source: allAfrica

‘VAT Machines are killing businesses in Gambia’ – Businessmen complain

 

23 January 2014

Local businesses in the Gambia are not the least happy with the recently introduced Value Added Tax (VAT) machines, which were imported into the country by businessman Muhammed Jah’s Quantum net company. Their displeasure is centered around the machines’ “worthiness, lack of reliability and proper maintenance” in the event of system glitch issues. The VAT machines were said to have been imported from Germany. The Ministry of Finance is reported to have spent D36 Million dalasi in purchasing the VAT machines. But the machines are not popular in the market. Business owners said the machine are not that effective and once it is reported faulty, it is hard to get it fixed. This is the machine that the regime uses to calculate VAT sales taxes leveled against consumers and business owners at cash registers.
 
The Value Added Tax was launched in the Gambia, following the amendment of the nation’s Income Sales Tax policy. VAT replaces the Sales Tax, which was being applied in Gambia’s Tax regime. ECOWAS member states are using VAT to regulate Income Tax, but a local business owner in Banjul said the Gambia has purchased the wrong machines to Tax businesses and consumers. The businessman also said he doesn’t trusts the reliability of the VAT machines currently imposed on Gambian businesses.
 

“The VAT machines are forced on businesses while the same taxpayer supply the machines through single sourcing. It was single sourcing. The purchasing of the VAT machines were never channeled through GPPA for fair bidding. The GPPA avoided the provision for fair bidding by awarding the contract to Mr. Jah,” said a Gambian businessman who wished to remain anonymous.

The VAT machines are new to Gambian businesses, whilst other countries haven’t use it for years before accepting the VAT machines. Why is it that the Gambia accepted the machines provided by Mr. Jah without contacting countries such as Kenya, who waited for years before accepting the VAT machines? I don’t think the Gambia is ready for VAT machines. The money that was wasted on this VAT machines could have been used to buy drugs for our hospitals,” he added.

 
The Gambia government purchased one thousand VAT machines from the vendor who was contracted to procure the machines on behalf of the regime. Muhammed Jah of Quantum net was said to have been responsible for the procurement of the machines. Mr. Jah himself could not be reached for comment to state his own side of the story on the controversy surrounding the VAT machines.
 
The Gambia Revenue Authority (GRA) is in charge of Income Tax Administration in the Gambia. The concerned businessman said he is appealing to the President Yahya Jammeh to look into the plight of business owners because the VAT machines is driving many businesses to close their stores.

“Many businesses are closing down because we are not familiar with the machines. Business owners ought to have been properly sensitized about the machines; its operation; usage; and how to facilitate its timely repair in the event the machines are faulty,” said the businessman adding that he has made repeated request in the past to have his VAT machine fixed, but to no avail. He said GRA is collecting millions from business owners and yet they cannot facilitate the timely fixing of the machines.
 

Source: Freedom News, Gambia

Tanzania: Despite govt orders, nationwide protests staged over EFDs

 

11 February 2014

Kariakoo market, the busiest in the commercial port city of Dar es Salaam is again at a shut down, only this time traders from cross the country have joined in a nationwide stand off to dispute government ordered use of Electronic Fiscal Devises (EFDs). For Kariakoo, this will be the second time for them to protest against the use of EFDs after doing so on November 18, 2013. Speaking to The Guardian a trader who preferred anonymity said apart from their complaints over the prices of the machines, the systems has a lot of other faults.
 
On Sunday a mass text was distributed among traders urging to close shop because ‘the EFD’s are not friendly to the development of traders instead they aims to kill traders’ capitals.’ However, Kariakoo Business Community (JWK) advisor Johnson Minja said the Community’s leadership is against the protest as they were waiting to meet with President Kikwete for further discussions over the matter. He said that JWK is making efforts to influence the traders to stop the protest until the President meets with them but so they have not succeeded.

“We tried to ask them not to close their shops but they have done their own bidding,” he said “…the business community has nothing to do with it…but we are still trying to influence the traders to open shop until we meet the President,” he added. 

He went on to explain that there is confusion among the traders from two contradicting statements by government officials. First a statement by Finance Minister Saada Mkuya saying all traders are to use the gadgets as of this month, while Minister of Industry and Trade Dr Abdallah Kigoda said that there should be a Commission or task force to go over traders grievances before they are forced to use them.

As in Dar es Salaam, traders elsewhere in the country too are on a shut down. Reports from Songea said that traders have also closed their shops demanding the government first respond to their complaints over the EFDs. In Iringa, businesses were suspended with traders complaining over high taxes and similar ‘faulty equipment’ complaints over the EFDs. Iringa Regional Commissioner Dr Christine Ishengoma urged the traders to stop the protest and continue with business while officials look to resolve their grievances.

Contacted, Deputy Minister for Finance Mwigulu Nchemba maintained government’s stand that the traders are supposed to comply with the law and use the gadgets. He said no one has the right to protest a law enacted by the Parliament noting that, if the traders have complaints, they should present them to the government but not to breach the law.

“There is no one, not the formed commission not the Minister, who can go against the law and stop the use of the machines,” he said “…if the traders think that they have something to say they should air their complaints but not protest the law,” he said. “The Ministry has no other statement, responsible authorities are to go on in collection of Taxes and we will also go on providing education and awareness to the traders and citizens over the operation of the EFD’s,” he summed up.
 

 

Source: IPP media

Tanzania: Government won’t backtrack on EFDs-TRA

 

12 February 2014

As traders continue to strike over the use of Electronic Fiscal Devises (EFDs), Tanzania Revenue Authority (TRA) has said that the government will not backtrack on the directive. Acting Commissioner of Tanzania Revenue Authority (TRA), Rished Bade, said his authority will continue to stick to its guns and those who will go against the directives, their licenses will be revoked indefinitely. Quoting Rished Bade

“There is no excuse on this. Traders must use the devises as directed,” Bade said, stressing that the time for tax avoiders has gone. ~ Bade.”

He said TRA has made a number of efforts to train traders on the use of the gadgets for the past three years. So, businessmen have nothing to say on this. Meanwhile, traders in the northern capital city of Arusha on Wednesday closed down their shops in protest against the use of Electronic Fiscal Devises (EFDs). No shopping was made since morning as no shop was open on the entire day as all traders gathered at the Golden Rose Hotel discussing on a number of issues related to the devices. Business community in Arusha joined their fellow traders, who are protesting against the vice in different parts of the country, such as Dar es Salaam, Ruvuma, Dodoma, Musoma, Mbeya, Makambako, and Iringa. Arusha joins Dar es Salaam and Mwanza regions, where traders have been closing their shops, demanding that the government backtracks on the issue of EFDs.

 

Grassroots sensitization required on TRA’s EFDs revenue system 

Closing down businesses, sitouts and suchlike have dotted Tanzania’s commercial landscape in recent weeks and months. They were staged to melodramatise the message that traders are against a novel business transaction recording system introduced by the Tanzania Revenue Authority (TRA). The system is centred on a programmed recorder, an Electronic Fiscal Device (EFD), effectuated on July 1, 2010. Traders with an annual turnover of Tsh14m are perforce required to use the devices, failure of which is statutorily punishable. When properly installed and applied, EFDs electronically record trade transactions on the spot, including ‘issuing’ receipts for all goods and services ‘purchased.’ EFDs are ‘connected’ to appropriate TRA equipment. Consequently, tax officials automatically receive a recording of trading transactions, and how much tax revenue accrues there from. If the system is to work more efficaciously, then the relevant institutions must provide ‘grassroots’ education thereof nationwide. Indeed, TRA is already doing that via its website and electronic broadcasts. The ‘Trader Massawe’ promotion via Radio Tumaini is a good start. Massawe no longer hides or runs away from TRA inspectors who call at his premises, and his ‘books’ are now a delight, thanks to the EFD system. If nothing else, this indicates that we must reach more ‘Traders Massawe’ to make a resounding success of the system.
 
 
Source: speechlog

Rwanda: Traders Face Penalty Over E-Billing Machines

 

23 April 2014

Rwanda Revenue Authority has started penalising Value Added Tax (VAT) registered businesses that have not yet acquired electronic billing machines (EBMs), Richard Tusabe, the RRA Commissioner General, has said.

Speaking on Monday after a tour of several downtown Kigali businesses, Tusabe said about 2,000 taxpayers were yet to buy the billing machines. The shop-to-shop check aimed at sharing challenges and experiences with the taxpayers as far as use of the machines is concerned. The taxbody had set March 31 as the deadline for all VAT-registered businesses to have acquired EBMs or risk fines.
 
According to Rwanda Revenue Authority, there are about 7,500 businesses registered for VAT. However, only 4,000 enterprises had acquired the machines by the end of last month. About 1,000 businesses are exempted from using the billing machines because they either aren’t VAT-registered or issue less than 30 receipts a year. Tusabe expressed disappointment over some of the 4,000 VAT-registered traders who have the machines but are not fully utilising them.

“We have started implementing the law. Those who are acting contrary to its provisions will be punished, depending on the size of the business,” he said.

 

Traders who don’t comply by the EBMs regulatory framework will be fined between Rwf5m and Rwf20m. Tusabe dismissed as false complaints by some businesses that the machines are expensive, arguing that traders supposed to buy them are VAT registered, and earn not less than Rwf20m in annual sales.

“When the machines were introduced, they cost Rwf500,000 each, which has since dropped to Rwf300,000. This is affordable considering these companies’ annual income,” he said.

 

He added that the price of electronic billing machines could reduce further as more businesses embrace them. 

“The process of having all businesses use these machines is a long one which also requires implementation of the law, sensitisation of traders and ascertaining the problems the business community faces in the process,” he said.

 

The machines are expected to ease tax collection and business management (on the part of traders). Some of the traders who are using EBMs are all praises for the initiative, saying it eases accounting processes.

“The billing machine makes bookkeeping easier. Customers have also embraced the culture of asking for receipts after buying,” said Therese Uwimana, the manager of Tropical Hardware store in the ‘Quartier Commerciale’ area.

 

She, however, said it was not easy to print receipts for every customer at times, especially when one gets many clients at a ago.

“There are customers who demand electronic billing machine receipts as well as those from the ordinary receipt book. So it becomes hard to prepare both, especially when customers are many. Besides, it makes it expensive in the long run,” she noted.

 

However, Tusabe discouraged traders from issuing customers manually-written receipts, saying that those from the electronic billing machines have all information a customer requires.
 
 
Source: New Times, Rwanda

Tanzania: President Kikwete directs on EFD tax machine use/price is main issue

 

27 April 2014

DAR ES SALAAM, Tanzania – Traders in the country will have no room to escape the use of Electronic Fiscal Devices (EFDs). President Jakaya Kikwete has directed the tax authority to ensure the business people use the device.

Tanzania Revenue Authority (TRA) has been involved in fights with traders who have objected from using the device on various claims. Some decry the high cost of buying the device saying the returns earn after using it are low.
 
The Tax Authority had introduced the use of the EFDs for issuing receipts and invoices for every sale made aiming at collecting tax efficiently from the traders. It started implementing the second phase of EFDs in 2013 with the aim of boosting revenue collections and simplifies tax collection. According to the authority the second phase will include non VAT registered traders who have a turnover starting from Tsh14million ($8,358) onwards.
 
When visiting Karatu district recently, President Kikwete told the TRA management to hold discussions with traders and find solutions to the issues they have raised. Issues that traders raised and which later triggered protest in various regions in the country against the use of EFDs include high prices of purchasing the devices which range between Tsh600, 000 ($358.188) to over Tsh700, 000 ($417.885) are among the issues of concern.
 
But TRA told traders the amount will be compensated through tax deduction.
 
The other claim by traders is their understanding about what recorded (sales) is and what not recorded (expenses) is by the machines. President Kikwete in his statement said the government will not retreat on the use the EFDs.

He said: “I know there are a lot of issues raised concerning the machines. But my advice is that you discuss the problems and find solutions. If the problem is price, it should be resolved. We need this system for efficient collection of tax. We cannot retreat on this. Doing so is the same as going backwards since the whole world including all our neighbours have started implementing or are preparing to establish this system.

 
 
Source: Business Week

Tanzania: TRA, Big business rallies traders against EFD use

 

5 May 2014

Devices for businesses making over 14m/- annually, yet street vendors in protest.

In a bid to continue evading taxes, big businesses in the country are accused of coaxing smaller traders to protest against the use of Electronic Fiscal Devices (EFDs) and in that regard, media has been urged to increase public awareness on the use of EFDs.
 
Among the points that media has been asked to clarify is that, only businessmen who record an annual income exceeding 14m/- are required to use EFDs.
 
Speaking over the weekend during a journalists’ workshop on the use of EFDs, Tanzania Revenue Authority (TRA) Tax payers Education Officer, Hamisi Lupenja, said the prolonged reluctance to use EFDs is a direct result of limited knowledge about the devices on the part of traders.

“It is astonishing to see food vendors, shoe makers, vegetable hawkers and other street hawkers taking to the streets to protest against the use of EFDs when they are in no way affected by them,” explained the officer. 

“They are unknowingly being used by big businessmen who seek to continue evading taxes,” he alleged saying big businessmen have been using the unsuspecting petty traders to protest against the use of the devices masking their own tax evasion intentions.

Lupenja insisted that through the media intervention, traders and the public in general will understand the use and importance of the devices and also who is required to use them.

He also clarified that it is not in TRA’s jurisdiction to authorise or stop the use of EFDs but rather:

“The order to use EFDs came from higher authorities and we, TRA, we are just agents. The sooner the traders learn to accept the devices the better because the government will not turn back on the issue.”

 
Lupenja explained that EFDs are vital in boosting the government’s revenue collection and in turn increasing available socio-economic development funds.
 
Among other uses of the device Lupenja mentioned checking tax evasion and helping businessmen keep records of their daily business transactions.
 
 
SOURCE: THE GUARDIAN

Tanzania: Traders refusing to use EFDs to go to jail for three years, TRA warns

 

8 May 2014

Businesses and trading enterprises that are by law supposed to use Electronic Fiscal Devices (EFDs) but do not will be charged 5 percent of the total amount of their collections on first warning, on the second warning of defiance, a penalty of 10 percent will be imposed and on the third time, a fine of between 1m/- and 3m/- and/or a jail term of not more than three years imprisonment will follow.

Tanzania Revenue Authority (TRA) says the directives are to be observed in accordance to set country laws as per Cap 104, subsection 2 of the TRA Act (2013) on revenue collection. Speaking to The Guardian over a telephone interview at the start of the week in Dar es Salaam, TRA’S Director for Taxpayer Services and Education Richard Kayombo warned of severe punitive measures against ‘stubborn traders’.

He also reiterated TRA’s commitment to enforce the use of EFDs with even much more vigour following President Kikwete’s recent firm remark: 

“The government is not going to reverse its stand over the mandatory use of EFDs. This is because we want to do away with unrealistic tax assessments that are based on guess work due to lack of reliable sales records on the side of the business community either due to poor record keeping or even intentional doctoring of records with the aim of evading taxes,” Kayombo went on to say urging the business community to be cooperative and comply.

 
The government recently made the use of EFDs compulsory as of 2010 with the first phase involving businesses registered with Value Added Tax (VAT) and those with no VAT registration followed.
 
There are three types of EFD machines accepted for use, Electronic Tax Register (ETR) Electronic Signature Device (ESD) and Electronic Fiscal Printer (EFP).
 
 
SOURCE: THE GUARDIAN

Mexico: Electronic arm-twisting

 

20 May 2014

SANTO DOMINGO square in downtown Mexico City is a colonial jewel where old-fashioned scribes write letters for the illiterate. Until a few weeks ago, it was also a place where unscrupulous vendors created fake invoices for tax-dodgers. But Mexico’s pioneering move, as of April 1st, to force the whole country to adopt electronic invoicing has killed the racket stone dead.

“The government has taken our business from us,” mourns the owner of an idle printing press.

 Neither tax collection nor technology is an area in which one would expect Latin America to be a global trendsetter. But when it comes to mandatory e-invoicing—that is, forcing buyers and sellers to register invoices with the tax authorities electronically when a transaction takes place—the region is blazing a trail that others, from the European Union to China, are considering following.

 
About a decade ago, Chile pioneered e-invoices, though they were optional and mainly used between businesses, as in much of Europe. (In English-speaking countries, tax authorities tend to rely on bank records, not invoices, as proof of a transaction.) Brazil, Mexico and Argentina built on the Chilean model, putting the tax authorities centre stage and making e-invoices compulsory for different groups of taxpayers. Much of the region has plans to do likewise in the next few years. Mexico’s new rules go the furthest: it is the only country to impose e-invoicing on individuals as well as firms.
 
The main motivation for e-invoicing is to stamp out tax evasion, says Fernando Martínez Coss of Mexico’s Tax Administration Service (the SAT), noting that between 2007 and 2009, the SAT lost $3.4 billion, largely due to what it euphemistically calls “apocryphal invoicing”. Brazil had similar motives, as well as wanting to streamline the collection of a tangle of local sales taxes, among other levies, according to Newton Oller, a Brazilian official who is pioneering new forms of invoicing.
 
Both systems took off largely because the tax authorities chose a single standard early on. They have also imposed digital signatures to ensure authenticity. In most countries, the technology is so quick it registers the invoices as fast as a credit-card transaction. There is a nerdy race to generate the highest volumes (see chart).

“Brazilians admit we’re winning the invoicing but they say they’ll beat us in the World Cup,” Mr Martínez chuckles.

There are many fringe benefits. In Mexico, the SAT estimates that paper invoices used to cost around $12.50 apiece, including printing, delivery, checking and five years of storage. There were more than 150 rules governing their drafting and processing. It took forests of trees to make them and cities of warehouses to store them. Provided businesses have the right technology, e-invoicing is cheaper, easier and better for the environment.

 
The tax authorities cannot get enough of the new technology. Four Brazilian states have begun forcing some retailers to produce e-invoices, as well as wholesalers. Since April 1st Mexico’s SAT has required 4.2m tiny businesses to report their revenue and costs every two months, using e-invoices. It hopes this will draw them into the formal economy.
 
That has caused lots of grumbles. Owners of the smallest firms often do not have the computer systems or skills to comply, and fear the tax authorities are out to get them using new technology. Larger firms are vexed that changes are imposed with short notice and the punishments for non-compliance can be similar to those for wilful fraud. Multinationals find too much complexity across the region. The SAT, for instance, has certified 75 companies to provide the invoicing software. Other tax authorities offer their own.
 
E-invoices can be a boon, though. Companies that offer them can win custom from those who need a verifiable record of their transactions. Hence, on a highway leading out of Mexico City where many lorry drivers stop to eat tacos, small restaurants now offer e-invoices so that customers can claim expenses. And in Santo Domingo square, one printing stall has a new sign boasting of its authorised e-invoicing facilities. The former forgers nearby regard it with loathing.
 
 
Source: Economist