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A REMARKS ON SELECTED TAX POLICY AND ADMINISTRATION INTERVENTIONS AT THE CEO ROUNDTABLE (CEOrt) Hyatt Regency Dar es Salaam. Harry M. Kitillya November 2013. SCOPE. 1.0 TRA 4 TH CORPORATE PLAN 2.0 TRA CP4 COMPLIANCE MANAGEMENT SCHEME 3.0 COLLABORATION WITH PRIVATE SECTOR - PowerPoint PPT Presentation
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TANZANIA REVENUE AUTHORITYTANZANIA REVENUE AUTHORITYTRATRA
1
A REMARKS ON SELECTED TAX POLICY AND A REMARKS ON SELECTED TAX POLICY AND ADMINISTRATION INTERVENTIONS AT THE ADMINISTRATION INTERVENTIONS AT THE CEO
ROUNDTABLE (CEOrt)
Hyatt Regency Dar es Salaam.
Harry M. KitillyaHarry M. KitillyaNovember 2013November 2013
TANZANIA REVENUE AUTHORITYTANZANIA REVENUE AUTHORITYTRATRA
1.0 TRA 4TH CORPORATE PLAN
2.0 TRA CP4 COMPLIANCE MANAGEMENT SCHEME
3.0 COLLABORATION WITH PRIVATE SECTOR
4.0 ENGAGING THE SMALL ENTERPRISES
5.0 COUNTER-PRODUCTIVENESS OF NEW TAXES
6.0 CHALLENGES AND OPPORTUNITIES AS
TANZANIA MOVES INTO GAS ECONOMY
7.0 ADDITIONAL MATTERS RELEVANT TO THE PRIVATE SECTOR
8.0 CONCLUSION
SCOPE
TANZANIA REVENUE AUTHORITYTANZANIA REVENUE AUTHORITYTRATRA
2.0 TRA 4th Corporate Plan
TRA has matured from a tax administration that
provides tax type services for revenue collection to
an efficient organization that delivers one stop
shop services for all types of taxes
The TRA operations are guided by Fiver-Year
Corporate Plans and we are now implementing the
fourth Plan 2013/14-2017/18 (CP4).
TANZANIA REVENUE AUTHORITYTANZANIA REVENUE AUTHORITYTRATRA
2.0 Fourth Corporate Plan Overview
The CP4 is built on achievements gained in CP3 and the desire to address challenges for continual improvement
The strategic focus of the Fourth Corporate Plan is summarised in its Vision, Mission and Core Values.
TANZANIA REVENUE AUTHORITYTANZANIA REVENUE AUTHORITYTRATRA
2.0 Fourth Corporate Plan Overview cont’dMission, Vision, Core ValuesVision:
“To Increase revenue to GDP ratio to 19.9% by 2018” Improve efficiency Widen the tax net: (informal sector, specialized sectors – mining, oil, gas
telecom, tourism, construction, real estate, financial sector)
Mission Statement:
“We make it easy to pay tax and make lives better” Ensure simplified and transparent processes Easy access to services Increased compliance hence Increased revenue collection
Core Values: Accountability – organisation that values and promotes accountability Integrity – fair and honest in dealings with stakeholders Professionalism – apply law fairly and consistently using our knowledge
TANZANIA REVENUE AUTHORITYTANZANIA REVENUE AUTHORITYTRATRA
2.0 Fourth Corporate Plan Overview cont’dStrategic Themes: common direction to achieve objectivesConvenience:
Deliver cost efficient, consistent and reliable taxpayer services Streamlining of processes; automation; self service options
* Req: A culture and practice of efficiency, transparency & accountability
Compliance: Taxpayer segmentation for optimal resource allocation based on risk Comprehensive taxpayer compliance strategy; service & education
pgms
* Req: A culture of high quality service delivery
Continual Improvement: TRA is a dynamic organisation, always changing for the better New ideas, innovation, sharing of information to improve
performance
* Req: A culture that is receptive to change
TANZANIA REVENUE AUTHORITYTANZANIA REVENUE AUTHORITYTRATRA
2.0 Fourth Corporate Plan Overview cont’dStrategic Objectives
.
Perspective Strategic Objectives
Financial 1. Improve operational efficiency2. Increase domestic revenue contribution
Customer 1. To be a prompt, technology enabled proactive partner Process 1. Simplify registration, assessment and payment to increase self-service.
2. Promote prompt clearance to improve trade facilitation3. Enable administrative and policy improvement 4. Drive effectiveness in collection and accounting, audit and
investigation, objections5. Promote segment focused education and service to drive voluntary
compliance
Learning & Innovation
1. Improve strategic Human resource capacity2. Develop culture that drives performance, innovation, collaboration and
leadership3. Increase ICT outreach and availability4. Enhance good governance capability
TANZANIA REVENUE AUTHORITYTANZANIA REVENUE AUTHORITYTRATRA
2.1 BALANCED PERSPECTIVES – Cause & Effect
Financial
“If we succeed, how will we look to our stakeholders?”
Customer
“To achieve our vision, how must we look to our taxpayers?”
Process
“To satisfy our taxpayers, at which processes must
we excel?”
Learning & Innovation
“To achieve our vision, how must TRA learn & improve?”
TRA CP4
CAUSE
EFFECT
TANZANIA REVENUE AUTHORITYTANZANIA REVENUE AUTHORITYTRATRA
..
TRA FOURTH CORPORATE PLAN STRATEGIC MAP
VISION: TO INCREASE REVENUE TO GDP RATIO 19.9% BY 2018
MISSION: WE MAKE IT EASY TO PAY TAX AND MAKE LIVES BETTER
FINANCIAL PERSPECTIVE
1. Improve operational efficiency
2. Increase domestic revenue contribution
CUSTOMER PERSPECTIVE
To be a prompt, technology enabled proactive partner.
INTERNAL PROCESS PERSPECTIVE 1. Simplify registration, assessment and
payment to increase self-service. 2. Promote prompt clearance to improve trade
facilitation 3. Enable administrative and policy
improvement 4. Drive effectiveness in collection and
accounting, audit and investigation, objections
5. Promote segment focused education and service to drive voluntary compliance.
LEARNING & INNOVATION PERSPECTIVE
1. Improve strategic Human resource capacity
2. Develop culture that drives performance, innovation, collaboration and leadership
3. Increase ICT outreach and availability
4. Enhance good governance capability
CORE VALUES: ACCOUNTABILITY, INTEGRITY AND PROFESSIONALISM
THEME: CONVENIENCE, COMPLIANCE AND CONTINUAL IMPROVEMENT
MILLENIUM DEVELOPMENT
GOALS
FIVE YEAR DEVELOPMENT
PLAN
MKUKUTA II
NATIONAL VISION 2025
MKUZA II KILIMO KWANZA
9
TANZANIA REVENUE AUTHORITYTANZANIA REVENUE AUTHORITYTRATRA
Willing to Comply
Trying to Comply
Do not Comply
Decided not to Comply
Use Enforcement Strategy
Deter by Detection
Help to Comply
Make it easy
Strategy ResponseTaxpayer Behavior
Le
vels
of
Co
mp
lian
ce
Level 1: Willing to ComplyCP4 Theme: ConvenienceDifferentiated Service OfferingAutomation and Self Service EnvironmentMove from Gate Keeper to Risk Manager
Level 2: Trying to ComplyCP4 Theme: ComplianceTaxpayer EducationReduce Administrative BurdenUnderstand the taxpayer business and advise
Level 3: Do not ComplyCP4 Theme: Continue Improvement360 View: Holistic view leading to early detectionEmpower our people with tools to perform at their peak Use of 3rd party data to uncover non complianceRoutine Audits
Level 4: Decided not to ComplyReferral to Tax investigationUse of the strongest arm of the lawReferral to other law enforcement
The Strategy
2.2 Developing Compliance Programme…
Registration
FilingDeclarationPayment
Areas of Compliance
TANZANIA REVENUE AUTHORITYTANZANIA REVENUE AUTHORITYTRATRA
3.0 Collaboration with Private Sector
Provision of quality service and building workable partnership with the taxpayers has been an ultimate goal of TRA’s major reforms
TANZANIA REVENUE AUTHORITYTANZANIA REVENUE AUTHORITYTRATRA
3.0 Collaboration with Private Sector cont’d Interventions taken to institute a tax administration that
collects Government revenue efficiently and effectively includes,
Introduction of One-Stop Centers and self-assessment system
Introduction of electronic lodgments of customs entries and tax returns;
Electronic payments of taxes through ASYBANK and mobile phones;
Introduction of Taxpayer Service Centers in Dar es Salaam Tax Regions; Implementation of Customs Post clearance Audit; Trade
facilitation reduction of clearance time on imports; Establishment of One Stop Border Posts
TANZANIA REVENUE AUTHORITYTANZANIA REVENUE AUTHORITYTRATRA
TRA has developed a Taxpayers’ Charter,
TRA also undertakes Taxpayers’ Perception
Survey and Stakeholders’ Forum,
A call center is now fully operational The commitment of TRA to ensure inclusiveness is articulated in its fourth five-year Corporate Plan
3.0 Collaboration with Private Sector cont’d
TANZANIA REVENUE AUTHORITYTANZANIA REVENUE AUTHORITYTRATRA
4.0 Engaging the Small Enterprises Small businesses are not major source of revenue
for governments. MSEs in Tanzania account 61 percent of the
taxpayer population and generates less than 2 percent of total domestic taxes.
Small business taxation is instrumental to facilitating MSEs’ participation in the formal economy
Presumptive taxation is the most appropriate method of tax administration for specific small business due to inability to comply with complicated tax statutes
TANZANIA REVENUE AUTHORITYTANZANIA REVENUE AUTHORITYTRATRA
4.0 Engaging the Small Enterprises cont’d
In Tanzania, the presumptive income tax was first introduced on July 1, 2000 as means to pull the informal sector in the tax net. Firstly, to reach out to those not reachable through the
formal Personal Income Tax (PIT)
Secondly, to institute in-built attributes to motivate
operators under the Presumptive Scheme to graduate into
the preferred tax system.
TANZANIA REVENUE AUTHORITYTANZANIA REVENUE AUTHORITYTRATRA
4.0 Engaging the Small Enterprises cont’d
TRA is implementing the Block Management System, (BMS). Tax Officers, from compliance and enforcement sections have been allocated toTo registering all traders within the blocks, To collect all types of taxes and manage tax debts To provide taxpayer services Focus in CP4 on Formalization of the Informal Sector
benefit from the enhanced identification of persons that the National IDs will embed.
Strengthen Block Management System Continual improvement in presumptive taxation scheme
TANZANIA REVENUE AUTHORITYTANZANIA REVENUE AUTHORITYTRATRA
5.0 Counter-Productiveness of New Taxes
The Tanzania Revenue Authority Act, Cap 299 established the TRA as a central board to assess, collect and account for all Central Government revenue and administer and give effect to the laws relating to such revenue.
The main mandate of the Tanzania Revenue Authority is not tax policy formulation, but tax policy implementation.
TRA is an advisor of the Ministry of Finance on fiscal policy through the Tanzania Revenue Authority’s Board.
TANZANIA REVENUE AUTHORITYTANZANIA REVENUE AUTHORITYTRATRA
5.0 Counter-Productiveness of New Taxes cont’d TRA’s advice on tax policy is implemented through
consultative processes and passes through the Task Force on tax policy reform, whose representation includes the private sector.
The rationale behind the introduction of three most contested reforms, namely withholding tax on services, excise duty on telecommunication SIM Card and Excise Duty on money transfer was in essence to increase Government revenue to finance the provision of social services.
Two of the reforms are in the courts of law and it probably a wise idea for me not to continue putting opinions on it.
TANZANIA REVENUE AUTHORITYTANZANIA REVENUE AUTHORITYTRATRA
6.0 Challenges and Opportunities as Tanzania moves into Gas Economy The discovered reserves of gas are likely to place
Tanzanian economy to higher levels of development than it is now.
The country need it for power generation and
revenue to bridge the budget gap
Currently Tanzania does not have specific tax
regime for oil and gas rather it uses existing
tax laws to tax the oil and gas industry
TANZANIA REVENUE AUTHORITYTANZANIA REVENUE AUTHORITYTRATRA
Since Oil and gas is a relatively new venture, Tanzania is faced with a number of challenges including.
Putting in place a modern regulatory and taxation framework for the industry to be sustainable.
Currently the industry is dominated by foreign experienced companies with high level technology and long-standing experience in the industry including tax planning
Overcoming these challenges will have a significant bearing for Tanzanians to realize the benefits of their
natural resources for their development.
6.0 Challenges and Opportunities as Tanzania moves into Gas Economy cont’d
TANZANIA REVENUE AUTHORITYTANZANIA REVENUE AUTHORITYTRATRA
Additional Matters Those Are Topical and Relevant to the Private Sector
This is such a grey area and the list may be endless. I would like to mentions just one or two issues of interest
We are rewriting the VAT Law with the intentions to align it with international best practice.
The Government also expects to enact the Tax Administration Act, which harmonizes in one book all the administrative codes and procedures
TANZANIA REVENUE AUTHORITYTANZANIA REVENUE AUTHORITYTRATRA
CONCLUSION
As for the Tanzania Revenue Authority, I wish, on my own behalf and on TRA’s behalf, to assure you that we are committed to creating a workable partnership with the private sector in revenue administration, and your inputs towards achieving this commitment together are most welcome and most valued.
TANZANIA REVENUE AUTHORITYTANZANIA REVENUE AUTHORITYTRATRA
Thank you once again for giving me an opportunity to speak at this roundtable dialogue.