ARTICLE
21 January 2025

Tax Enforcement: Simplifying Execution Of Tax Appeal Decisions And Its Implications On The Taxpayer

On 30th June 2024, the Tanzanian Minister for Finance published two important amendments to the Tax Revenue Appeals Board Rules, 2018 and Tax Revenue Appeals Tribunal Rules, 2018 (together the "Amendments"), which give provide guidance on the process of enforcement of decrees or orders by the Tanzania Revenue Authority (TRA).
Tanzania Tax

On 30th June 2024, the Tanzanian Minister for Finance published two important amendments to the Tax Revenue Appeals Board Rules, 2018 and Tax Revenue Appeals Tribunal Rules, 2018 (together the "Amendments"), which give provide guidance on the process of enforcement of decrees or orders by the Tanzania Revenue Authority (TRA). In terms of these Amendments, the TRA does not need to initiate execution proceedings to enforce decisions of the Tax Revenue Appeals Board (TRAB) or the Tax Revenue Appeals Tribunal (TRAT).

Before the Amendments came into force, the law remained silent on how the TRA could enforce decisions issued by the TRAB and TRAT. This lacuna in the law, resulted in conflicting court interpretations, where one school of thought insisted that the TRA must file execution proceedings and obtain the necessary execution orders before enforcing any decision made by the TRAB or TRAT. The second school of thought argued that due to the TRA's mandate, it was sufficient for the TRA to simply enforce the decisions issued by TRAB and TRAT without having to file an application for execution or obtain execution orders.

With the new Amendments in place, it is now clear that the TRA can directly enforce decisions of the TRAB and TRAT, without filing execution proceedings. The enforcement of the orders issued by TRAB and TRAT can be carried out in the same manner as the recovery of unpaid taxes, as outlined in Part VIII of the Tax Administration Act, 2015. This includes filing suits for unpaid taxes, recovering taxes from withholding agents, placing charges on the taxpayer's assets, selling those charged assets, and ordering restraints to prevent individuals or property from leaving the United Republic of Tanzania. Additionally, the TRA can recover taxes from third parties, including the taxpayer's managers, receivers, debtors, and guarantors.

This simplified enforcement process eliminates potential delays that could arise from lengthy execution proceedings, thereby enhancing the TRA's efficiency in recovering owed taxes. The amendments also provide a more predictable and transparent mechanism for both the TRA and taxpayers, ensuring that the enforcement of decisions is swift and consistent. By clarifying the enforcement process, we believe the government aims to improve tax collection and reduce the backlog of unresolved cases that previously hindered the effective implementation of tax rulings.

However, the changes also place a greater burden on taxpayers who may feel that the decisions made by the TRAB or TRAT are unjust. Given the immediate enforcement capabilities granted to the TRA, taxpayers who wish to challenge these decisions must act swiftly to protect their interests. This raises the question: What protection against enforcement does a taxpayer have if they are still aggrieved by the decision and wish to appeal further? In such cases, the taxpayer should act swiftly to immediately file an appeal with a higher court and subsequently file an application to stay the TRA's execution. Since the execution is automatic under the new law, this would be a critical step for any taxpayer wishing to pause enforcement while the appeal is pending.

Originally published 19 December 2024

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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