DSM-CPA (T) REVIEWS B4 &C4-Public Finance and Taxation II CPA (T) DAVID D KIWIA

TAX DISPUTE SETTLEMENT BEHAVIORS

Dispute means having different views of an issue or matter or disagreement on a point of law or a
fact or a conflict of legal view between two persons.

Tax Disputes is a disagreement between tax authorities and tax payers on assessed tax or any
decision of the commissioner general.

Causes of Tax Dispute

i) Compilation of the tax laws

Tax laws are drafted in a complex way which make an ordinary citizens not to understand.

ii) Arbitrary assessment

Usually tax officials need to meet revenue targets, this exercise cause tax administrators to
panic as a result issues arbitrary assessment.

iii) Lack of knowledge on interpretation of laws by officials of the revenue authority and hence
issue wrong assessment.
iv) Culture of avoiding paying tax
v) Multiplicity of taxes: there are too many taxes to comply which cause confusion to many
tax payers.
vi) Improved system and technology with tax authorities.

Measurement to Avoid Tax Disputes

i) General ruling or other published statements of the tax administration on specific topic by
issuing practice notes, tax laws interpretation manuals etc.
ii) Binding private ruling issued at the tax payer request.
iii) Education to tax payers in how to calculate taxes and when to pay.

Tax disputes settlement in Tanzania

Article 13(6) (a) of the constitution of URT gives rights to any person to be heard.

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Kiwia, David D. CPA-T, BAF, MFA-OG PhD(ip) Email. kiwiadavid09@gmail.com Cell 0716 734 577
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It state that: when the right of any person are being determined, that person shall be entitled to a
fair hearing. For that regard in 2000 the parliament enacted the parliament enacted the Tanzania
Revenue Appeal Act with the purpose of creating a unified forum in resolving tax disputes fairly.

LEVEL OF THE DISPUTES SETTLEMENT IN TANZANIA

Levels can be categorized in 2 groups

i) Internal tax dispute mechanism (TRA in Building Mechanism)

ii) External Tax Dispute Mechanism (Appeals Mechanism)

1. INTERNAL TAX DISPUTE MECHANISM (TRA IN BUILDING MECHANISM)

The first forum for dispute mechanism should be within the taxation authority who first issued the
assessment or tax decision being disputed. Here the tax payer is given an opportunity within a
limited time to object the assessment or the decision.

Objection to tax assessment or decision sec. 51(1) of tax Administration act, 2015 provides that “a
person with is aggrieved or not satisfied by a tax decision or assessment made by the commissioner
general may object the decision by filling the objection to the commission General.

Condition for Valid Notice of Objections

1. It must be in writing to the Commissioner General Sec. 51(4) of TAA, 2015. Should not
be verbal.
2. The objection must be filled and received by a commissioner within 30 days from the date
of services of the tax decisions or assessment sec 51(1).
3. The objection must state the grounds in which the objection is made sec 51(4).
4. The person objecting must pay the amount of tax which is not in dispute or 1/3 of that tax
assessed whichever is greater.
For example
Tax assessed 600,000,000
Tax not in dispute (agreed by TP) 100,000,000
Tax deposit is a greater of
i) Amount not in disputes 100,000,000
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Kiwia, David D. CPA-T, BAF, MFA-OG PhD(ip) Email. kiwiadavid09@gmail.com Cell 0716 734 577
 DSM-CPA (T) REVIEWS B4 &C4-Public Finance and Taxation II CPA (T) DAVID D KIWIA

ii) 1/3 of assessed tax (600,000,000 X 1/3) = 200,000,000

The greater is Tsh. 200,000,000

5. For tax assessed on import, tax deposit is the whole amount of duty.

Therefore, the commissioner general will refuse to admit the notice of objection if the
objection,

a) Is not in writing
b) Do not state the grounds in which the objection is made.
c) The tax payer has not yet paid the tax deposit.
d) The objection is time barred (more than 30 days after the date in which tax assessment
was made)

Note that:

Tax deemed not in dispute means the tax amount that would be assessed if the assessment or tax
decision is amended in accordance with the objection.

• But in case of import duty, the whole amount assessed

Relief for General Requirement

a) Extension of time to file an objections sec 51(2)

Under this section the commissioner may accept to admit the notice of objection which is time
barred provided that the person has a reasonable ground to warrant extension of time to file an
objection against a tax decision may apply for an extension of time, for example.

• If the person was not in URT

• For the reason of sickness
• Other reasonable causes upon satisfaction by the Commissioner General
b) Reduction or waiver of tax deposit sec 51(6)

The Commissioner General may accept the valid notice of objection without payment of tax
deposit (the higher), where the commissioner general is satisfied that there is a good reasons
warranting reduction or may waive the amount to be paid or accept the lesser amount.

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Kiwia, David D. CPA-T, BAF, MFA-OG PhD(ip) Email. kiwiadavid09@gmail.com Cell 0716 734 577
 DSM-CPA (T) REVIEWS B4 &C4-Public Finance and Taxation II CPA (T) DAVID D KIWIA

2. EXTERNAL TAX DISPUTE SETTLEMENT MECHANISM (APPEALS

METHOD)

Appeal means to ask a higher court to reverse the judgment of the lower court.

Tax Appeal system in Tanzania

Sec53 (1) of TAA provides that: a person who is not satisfied with the objection decision by the
Commissioner General may Appeal.

Tax Revenue Appeal Act provides a 3 levels of Appeal Process as follows

i) Tax Revenue Appeal Board (TRAB)

ii) Tax Revenue Appeal Tribunal (TRAT)
iii) Court of Appeal Tanzania (CAT)

I. Tax Revenue Appeal Board (TRAB)

Tax Revenue Appeal Board is an independent department under the Ministry of Finance which its
core function is to hear and determine civil tax disputes arising from revenue laws administered
by the TRA.

Examples of Tax laws administered by TRA

• The Income Tax Act Cap 332

• The VAT 2015
• East Africa Custom Management Act, 2004 amended 2006
• Stump duty Act, 1984
• Excise duty ordinance, 1976

Jurisdiction of the Revenue Appeal Board (TRAB)

Sec 7 of Tax Revenue Act, provides that:-
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Kiwia, David D. CPA-T, BAF, MFA-OG PhD(ip) Email. kiwiadavid09@gmail.com Cell 0716 734 577
 DSM-CPA (T) REVIEWS B4 &C4-Public Finance and Taxation II CPA (T) DAVID D KIWIA

The Board shall have sole original jurisdiction in all Proceeding of civil nature in respect of dispute
arising from Revenue laws administered by the TRA.

Composition of the TRAB

Sec 4(2) of the tax revenue Appeals Act provides that:
The Board shall consist of:-
a) A chairman who shall be appointed by minister.
b) Two vice chairman who shall be appointed by minister of finance.
• One from whom must be from Zanzibar.
c) Four other members appointed by the minister from each region an objection originate.
Qualification:-
A person maybe appointed to be:
a) Chairman
If he is a principal legal officer or a person having adequate knowledge in Taxation.
b) A member of the Board
If he has a knowledge of and experience in commercial and finance matters
Procedures for Appeals to the Board
✓ An Appeal to the Board shall be instituted by lodging a statement of Appeal’s at the registry
of the Board with 45 days from the date of service of the Notice of final determination of
assessment of tax and decision.
✓ The Appellant must save the notice of intention to Appeal to the Commissioner General within
30 days from the date of service of CG.
Attachment Required when Logging an Appeals.
• A copy of notice of assessment of Tax
• A copy of notice of objection to an assessment submitted to the Decision of the commissioner
General.
• A copy of decision of the Commissioner General.
• Any additional which may be required
Critic of the constitutions and jurisdiction of the TRAB (Tax Revenue Rules)
1. No qualification are spelt out for the vice chairman of the Board
2. Possession of knowledge and experience in commercial or financial matters not an ideal
Qualification for the membership of the Board.
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Kiwia, David D. CPA-T, BAF, MFA-OG PhD(ip) Email. kiwiadavid09@gmail.com Cell 0716 734 577
 DSM-CPA (T) REVIEWS B4 &C4-Public Finance and Taxation II CPA (T) DAVID D KIWIA

II. Appeal’s Tax to the Tax Revenue Appeal Tribunal

Sec (4) of the tax Revenue Appeal Act

Provides that a party who is aggrieved by the Decision of the Board may Appeal against that
Decision to the tribunal.
Note:
A Tribunal is a special court usually established by the government outside the hierarchy of the
regular court system to hear and determine matters of a particular kind e.g Tax
Jurisdiction of the TRAT
Sec 11 of the Tax Revenue Appeal’s Act’s
Provides that, the Tribunal shall have sole jurisdiction in all appeal’s arising from the Decision of
the Board on Dispute on which original jurisdiction is conferred on the Board.
Composition of the TRAT.
TRAT is constituted by:-
a) A chairman appointed by the president
b) Two vice chairman the president ,by which one is from Zanzibar
c) Four other members appointed by the minister.
Qualifications
A person may be appointed has:-
i. Chairman
If he is a judge of a High Court
ii. Member of the tribunal
If he has knowledge of and experience in, Taxation, commercial or financial matters.

Procedure for Appeal to the Tribunal.

A party who is aggrieved by the Decision to the Board may appeal against that Decision to the
Tribunal within 30 day from the date of services of the services of the Decision of the Board.
An Appellant shall notice the opposite party with the notice of the intention to appeal within 15days
from the date of the decision of the Board.
• Attachment Required
✓ A copy of the proceeding of the board
✓ A copy of the notice of the intention to appeal to the tribunal
• Payment of fees
The appellant shall pay appropriate fee as specified in the second schedule to the TRAT rules.
Powers of the Board and Tribunal Sec 17
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Kiwia, David D. CPA-T, BAF, MFA-OG PhD(ip) Email. kiwiadavid09@gmail.com Cell 0716 734 577
 DSM-CPA (T) REVIEWS B4 &C4-Public Finance and Taxation II CPA (T) DAVID D KIWIA

1. To take evidence on oath

2. To Restore any appeal by mediation , Reconciliation or arbitration
3. To issue warrant of the rest failure to comply with summons
4. To order payment of costs in relation to any matters referred to the Board or Tribunal.
5. To dismiss any matter before it.
6. To adjourn or suspend or postpone the hearing before it.

Differences between TRAB & TRAT.

1. It has sole Jurisdiction in all matters of It has sole Jurisdiction in all appeal’s arising
a civil nature in appeal’s arising from from the decision of the board
the revenue law’s administered by TRA

2. Composition The chairman appointed by president with

The chairman of the Board is appointed consultation of chief justice
by the minister responsible for frame

3. It has 2 vice chairman appointed by It has 2 vice chairman appointed by the

minister responsible for finance one of president one of whom must be from tz
whom shall be from tz Zanzibar Zanzibar

4. The chairman of the board must be Chairman of the tribunal must be a judge of the
principal legal officer or a person high court.
having adequately knowledge of
taxation.

5. Board members Board members

It has 4 members appointed by the It has 4 members appointed by the minister
minister responsible for finance from responsible for finance disregarding
each region where the appeal orginate. regionalism

6. A person who disagree with the decision Any person who disagree with the decision of
of the board may appeal to the tribunal the tribunal may appeal to the high court.

Merit and Demerit of an Administrative Tribunal System over the Court System
MERIT
a) It is less formal hence less complicated i.e it does not consider some formalities or procedure
which apply under the court system.
b) Takes less time compared to court system
c) Appellant can be represented by any person not necessary an Advocate

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Kiwia, David D. CPA-T, BAF, MFA-OG PhD(ip) Email. kiwiadavid09@gmail.com Cell 0716 734 577
 DSM-CPA (T) REVIEWS B4 &C4-Public Finance and Taxation II CPA (T) DAVID D KIWIA

DEMERITS
a) Independence of the Board or tribunal maybe impaired coz they are appointed by the minister
of finance.
b) Board or Tribunal may lack necessarily technical expert’s in Taxation matters and laws
c) The Board is limited to civil case only.

Appeal’s to the Court of Appeals of Tanzania.

Sec 25(1) of the TRA Act, provided that any person who is aggrieved by the decision of tribunal
may Appeal to the court of appeal.
• Court of the appeal in Tanzania is the highest court in the land.
• It deals with both criminal and civil cases.
• It creature of article 117 of the constitution of URT of 1977.
• All court and tribunal are bound by the decision of the court of appeal regardless of their
correctness.
Procedures of the Appeal to the CAT
• A part who is aggrieved by the decision of the tribunal may appeal against that decision to the
CAT within 30 days from the date of service of the decision of the tribunal.
• The appellant shall serve to the opposite party the notice of the intention to appeal within 14
days from the date of the decision by the tribunal.
• Sec 25(2) of the TRA Act, provided that appeal to the CAT shall lie on the matter of involving
questions of law only.
For example:
✓ There was an error of interpreting the law by the tribunal in reading its decision OR
✓ The tribunal was concluded without the required Quorum OR
✓ In reaching the decision the tribunal has over looked a provision in a relevant statute
Finality of Assessment Sec 15.
Sec (15), of the TRA Act, provided for the time when the assessment is considered to be final.
The assessment is considered to be final and conclusive if:-
a) No notice of objection have been given.
b) If the notice of assessment is amended according to tax payer’s objections.
c) A notice of objection has been given, and the Commissioner General has refused to amend the
assessment but no appeal has been preferred.

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Kiwia, David D. CPA-T, BAF, MFA-OG PhD(ip) Email. kiwiadavid09@gmail.com Cell 0716 734 577
 DSM-CPA (T) REVIEWS B4 &C4-Public Finance and Taxation II CPA (T) DAVID D KIWIA

d) The objection has been final determined on an Appeal.

Miscellaneous:-
Example of Appealable matters
1. Income tax
• Assessment of income tax payable.
• Other decision of the commissioner
For example on amount calculated as allowable deduction OR
When the Commissioner General refuses to make any refund or repayment

2. VAT
• Assessment of income tax payable.
• Other decision by the Commissioner General
For example a decision by the Commissioner General to register or refuse to register a
trader.
• Refuse by the commissioner to make any refund or repayment.
Basic Consideration in Designing Tax Distribution Settlement Mechanism
a) It should be cost effectiveness (for both TRA and tax payers)
b) Should be timely
c) Independency
The tax dispute settlement system should be independent to the extent that tax payers have
faith and confidence in their decisions.
d) Fairness mechanism
Tax dispute settlement mechanism should be fair especially to the tax payers.
e) Should be efficiently.
i.e with right person selected by Merit and are covenant with knowledge of taxation laws

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Kiwia, David D. CPA-T, BAF, MFA-OG PhD(ip) Email. kiwiadavid09@gmail.com Cell 0716 734 577