Envoys’ worries mirrors local businesses’ unease with TRA

The Guardian
Published at 06:00 AM Jul 01 2024
EFD Machine
Photo: File
EFD Machine

SOME top officials in the government have been busy seeking to convince key development partners that the state appreciate good governance and respect for the rule of law as key pillars of progress and prosperity.

This was the position expressed just the other day by the Foreign Affairs and East African Cooperation minister in the wake of highly critical communication to the ministry, penned by the French Embassy and obtaining the say-so of nine other foreign missions.

The issue was intense concern over the tax administration practices by the Tanzania Revenue Authority (TRA) on foreign investors, with the foreign missions calling for government intervention – which raised vast eyebrows.

The extent to which concern over drawbacks in economic policy and tax administration was put across indicated that the envoys’ assessment that ‘the good work being done by so many to restore Tanzania’s reputation as a destination for Foreign Direct Investment (FDI) is now being undermined’ was hardly an exaggeration.

Yet what is surprising is that all that is listed as habitual with the tax authority is precisely what the government has been making an effort to dispel or correct, to little avail as it now appears.

There is perhaps less vim and vigour compared to the heyday of the Tax Revenue Task Force.

The envoys’ letter appreciated the significant progress registered in attracting and expanding quality international investment into Tanzania over the past few years.

However, it meanwhile also noted that the progress referred to faced noticeable disruption induced by TRA notices.

The envoys argued that the notices were often not backed by evidence on various claims, demanding payments and account reconciliations dating back up to 15 years for foreign investors.

One directive back in 2021was that tax claims should not be dated to five years earlier but much more recently, in which case sending tax claims to foreign investors dating back 15 years indicated not error but crafty defiance.

The letter said the headway made in attracting and expanding quality international investment into Tanzania over the last few years was at risk of being unmade by negative tendencies hampering this progress.

And, for the envoys, the problem is not far to seek – it was that many of those high up in government did not believe in an environment that was good for business but where doing business was a privilege, thus onerously taxed or levied.

There has been significant turnover in the office of the TRA Commissioner General while the mood or operational habits and attitudes have largely remained the same.

There is something in United States idiom known as the ‘deep state’, where officialdom is in total agreement on what needs to be done irrespective of day-to-day directives or hints from the top leadership.

The envoys’ letter advised that good governance and best practices should be agreed through regular trade missions and meetings with foreign investors as a business community.

That was evidently given the fact that business investment registrations from those countries increased from US$3 billion in 2022 to US$5.5 billion last year – that is, in just over one year.

The letter applauded the Tanzania Investment Centre for a job well done, but there were indications that the target lay elsewhere.

Still, a modestly important wing of the state appears to be attached to other priorities, the main concern being a ‘win-win’ situation in the sharing of the profits.