Tribunal suspends new bank transfer fee

The Tanzania Revenue Authority (TRA) suffered a major setback yesterday after it was barred from imposing a new tax on money transfers in a case lodged with the Tax Revenue Appeals Board.

On Thursday, a court ruled that the customs and excise duty that Parliament passed in the June budget session be suspended until a complaint filed by 37 banks is heard. 

The taxman had written to the banks last month, warning of undisclosed measures should they fail to impose the 0.15 per cent excise duty on all money transfer services.

The new tax, which was to take effect on July 1, also applies to telecommunication companies. They were required to retain Sh1,000 every month for each mobile SIM card held by the more than 20 million phone subscribers in the country.

The Citizen on Saturday established yesterday that the board gave the orders the banks requested under certificate of urgency to forestall any penalties until their case is heard and decided.

Mobile firms Airtel, Tigo and Vodacom have also filed a similar case with the board but the matter is yet to be heard. A consumer lobby group also went to the High Court to protest against the tax that was meant to raise over Sh160 billion every month to finance the government’s budget.

TRA has written to the mobile phone firms warning of consequences should they fail to tax SIM card holders as per the new law.

In the case of the banks, the board agreed to the request that TRA maintains the status quo as the parties await the outcome of the main case. The banks argued that they could not effect the new tax because it did not clearly define the scope of the excise duty, including what constituted “transfer” and “money transfer services”.

The Board directed that the parties file counter-arguments by yesterday to allow for quick dispensation of the matter before the main suit could commence. The case will come up for another mention after October 15.

They also want the law to provide clear guidance on the accounting methods and payment of the excise duty before they comply. They also noted that there was confusion in terms of verification and discharge of the tax.

According to the banks, either the government or TRA had ignored their earlier appeal for guidance on the smooth execution of the tax before TRA could begin imposing penalties. 

The affidavit filed with the Board read: “TRA summarily rejected to provide any clarifications, thereby abdicating its duty to provide administrative guidance to clients, applicants and other tax payers in general.”

The tax agency, the banks said, had confused them more by not releasing the correct guidelines even as it allegedly contradicted itself.

“In the absence of the clarifications sought, it will be impossible to comply with the law without either committing unintended default or enforcing withholding requirements against persons who are not subject to the new excise duty,” the banks protested.

Like mobile firms, the financial institutions had unsuccessfully lobbied the ministry of Finance against the tax before moving to the board--which enjoys powers of a court.
Source: The Citizen, reported from Dar es Salaam, Tanzania
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