One-stop centre key to simplifying tax, fee payments

DAR ES SALAAM: STAKEHOLDERS have recommended the establishment of a onestop centre where all taxes and fees related to regulatory authorities performing similar functions would be paid.

They said that having such a centre would not only lower the compliance burden for businesses, which currently have to visit each authority separately, but would also address the challenges posed by multiple regulators.

They explained that the establishment of a one-stop centre for taxes and regulatory fees would significantly improve efficiency, transparency and compliance, benefitting both businesses and regulatory authorities.

Stakeholders also advised the government to consider reducing the number of taxes and lowering tax rates, especially Value Added Tax (VAT), to discourage businesses from attempting to evade taxes.

They noted that an increase in taxes often leads businesspeople to seek alternative ways to avoid tax payments.

Presenting the recommendations, Chairman of the Tanzania Chamber of Commerce, Industry and Agriculture (TCCIA) in Mwanza Region, Mr Gabriel Kenene, underscored the need for a one-stop centre for regulatory authorities performing similar functions.

This, he said, would help reduce the compliance burden on businesses.

Multiple regulators challenge businesses

Mr Kenene explained that a single business is required to interact with multiple regulators for tax compliance, including the Tanzania Medicines and Medical Devices Authority (TMDA), Tanzania Bureau of Standards (TBS), Government Chemist Laboratory Authority (GCLA) and the Tanzania Atomic Energy Commission (TAEC).

Other regulatory bodies include the Occupational Safety and Health Authority (OSHA), National Environment Management Council (NEMC), Lake Victoria Basin Commission (LVBC), Fire and Rescue Force and the Weights and Measures Agency (WMA).

Additionally, businesses must engage with the Land Transport Regulatory Authority (LATRA), Tanzania Shipping Agencies Corporation (TASAC), Energy and Water Utilities Regulatory Authority (EWURA), Local Government Authorities (LGAs) and the Tanzania Communications Regulatory Authority (TCRA).

We suggest the establishment of a one-stop centre where all taxes and fees related to regulatory authorities performing similar functions would be paid. This would lower compliance costs for businesses,” Mr Kenene said.

The TCCIA-Mwanza Chairman recommended reducing VAT from the current 18 per cent to 16 per cent, similar to other East African countries, to encourage compliance.

He emphasised the importance of creating a friendly business environment to attract more taxpayers into the system and ease the burden on the few currently paying taxes.

“We should include all eligible businesses in the VAT system to create a fair playing field, especially in pricing, as businesses under VAT tend to have higher prices compared to those not registered,” he said.

Reducing multiplicity of taxes

Mr Kenene also called for reducing the number of taxes, fees and charges imposed on businesses, noting that their multiplicity increases operational costs and administrative burdens.

“These taxes often involve dealing with multiple regulatory bodies, each with its own rules and requirements, which are difficult to navigate efficiently. This underscores the need for streamlined processes such as a one-stop centre,” he said.

He added that excessive taxation reduces business capital and contributes to tax evasion, ultimately leading to revenue losses for the government.

Currently, businesses are required to pay multiple charges including income tax to the Tanzania Revenue Authority (TRA), waste disposal fees, loading and unloading charges, billboard fees, service levy (0.3 per cent of gross sales), hotel levy (10 per cent of gross sales), parking fees and market fees.

The TCCIA’s views were echoed by Chairman of the Mwanza Hotels Owners Association (MHOA), Mr Nyiriza Makongoro, who urged the government to reduce the multiplicity of taxes to curb corruption.

“The proliferation of taxes creates room for negotiations between TRA officers, auditors and business owners, which ultimately leads to corruption,” he said.

He noted that the hotel sector faces at least 22 different taxes, levies and charges, including service levies, business licence fees, corporate tax, withholding tax and parking fees.

Mwanza Region, with a population of approximately 3.6 million according to the 2022 census, contributes 7.1 per cent to the national GDP.

Stakeholders presented their views to the Presidential Commission on Tax Reforms, chaired by Ambassador Ombeni Sefue, in Mwanza.

The commission, which began its work in October last year, was given six months to propose reforms aimed at overhauling the country’s tax structure and increasing its contribution to GDP.

Its mandate includes addressing tax challenges, enhancing the business environment, promoting voluntary compliance, expanding the tax base and addressing public grievances related to taxation.

Chairman of the Mwanza Minerals Market, Mr William Kulindwa, proposed measures to encourage the formalisation of the informal sector.

These include introducing small registration fees and simple tax levies for small-scale miners.

“Many miners operating outside the formal system would be encouraged to register and pay taxes if the process was less burdensome and more affordable,” he said.

He also proposed that the service levy be based on profit rather than turnover.

“The levy should be collected based on profits rather than the current system of collecting from sales turnover,” he added.

Tax system challenges

Mr Kulindwa also called for improvements in digital tax collection systems to make them more userfriendly.

“The current systems are riddled with challenges and inefficiencies, making it difficult for taxpayers to comply,” he said.

His views were supported by Mwanza-based auditor and tax consultant Ms Hadija Mshamu, who pointed out issues with the TRA system.

“Taxpayers may pay assessed penalties, but the system still shows pending balances, creating confusion,” she said.

She urged TRA to address system failures and ensure prompt handling of taxpayer concerns.

Conflict of interest concerns

Representing the Mwanza Business Community, Mr Hamis Mgele raised concerns over alleged misconduct by some local government employees.

He said some officials have taken control of business stalls and act as intermediaries, charging traders higher fees.

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“This has led to vacant stalls in areas such as Nyegezi Bus Stand and Nyamhongolo Bus Stand, negatively affecting tax collection,” he said.

The business community recommended the establishment of a permanent commission to address business environment challenges.

Stakeholders maintain that the establishment of a one-stop centre, reduction of taxes and simplification of compliance systems are key to improving Tanzania’s tax environment.

They argue that such reforms would lower the cost of doing business, reduce corruption, encourage formalisation and ultimately expand the country’s tax base.