TRA issues onemonth ultimatum to digital tax evaders

THE Tanzania Revenue Authority (TRA) has issued a one-month ultimatum spanning from August 1 to August 31 this year to both local and foreign digital business operators to register with TRA and comply with national tax regulations.

The companies that will comply with the directives will not be subjected to penalties during the grace period.

The announcement was made by TRA Commissioner General Yusuph Mwenda on Thursday during the launch of a Memorandum of Understanding (MoU) between TRA and the International Bureau of Fiscal Documentation (IBFD).

He said after the deadline, those who will have failed to comply will be subjected to legal action in accordance with existing tax laws.

The agreement, signed to enhance TRA staff capacity in international taxation, was unveiled at the Institute of Tax Administration in Dar es Salaam in a ceremony attended by TRA and IBFD officials.

Mr Mwenda said the rise of the digital economy in the country has led to widespread tax avoidance, particularly by foreign platforms earning income from Tanzanian users without proper registration or disclosure.

“Digital platforms are expanding rapidly in our country and are contributing to tax non compliance. We have services like Netflix, Facebook, Instagram, Airbnb, Booking. com and Expedia generating income from local users, but only a few are fulfilling their tax obligations,” he said.

Mr Mwenda said that while some platforms are cooperating with TRA, others are not. He stressed that tax compliance involves more than just payment, it requires proper registration, filing and transparent information sharing.

He said a review of payments made over the past three years shows clearly that many platforms have failed to meet their obligations.

The taxman added that a significant number of Tanzanian businesses and individuals who operate on or work through the said platforms are also failing to register, file returns or pay the required taxes.

“We’ve identified a growing number of local operators who have not registered with TRA despite meeting the minimum income threshold that requires them to do so. Some of them don’t even appear in our records. This is a major gap in tax compliance,” he said.

He added: “This is about fairness and equity. Local individuals doing the same type of business for example in the hospitality industry are complying with tax rules, issuing receipts and paying taxes. Yet some operators working through digital platforms are not, and that creates an uneven playing field,” said Mwenda.

ALSO READ: Tanzania sees success in digitalized tax system

“In response, TRA will grant a grace period from August 1 to August 31, this year, during which digital platform operators can register without incurring penalties. After that, those who remain noncompliant will face legal action under existing tax laws,” he said.

He added: “This is a final opportunity, once the grace period ends, non compliance will be treated as a violation of the law and enforcement will follow.”

Mr Mwenda also recalled a new law enacted by the Parliament, which came into effect on July 1, this year, requiring all digital platforms operating in the country to integrate their systems with TRA.

This will enable automatic information sharing and better monitoring of taxable activities.

“We now expect platforms like Airbnb and Booking.com to fully integrate with TRA systems and share relevant business data. This will ensure that everyone pays their fair share, in line with the principle of equity,” he said.

Furthermore, Mwenda reminded all digital service providers and their partners to begin using Smart Virtual Fiscal Devices (Smart VFDs), mobile-enabled tools for issuing digital receipts as part of efforts to improve transparency and eliminate excuses for not issuing receipts.

“You no longer need physical devices. The Smart VFD application can be downloaded and used directly on your phone. Issuing receipts is not optional but it is a legal requirement,” he insisted.