To be compliant with tax laws, you need to know your obligations. That is expected behaviours that are legally binding and enforceable. But you also need to know your rights. Professor Duncan Bentley, a renowned writer on of taxpayer rights, once asserted that “taxpayers who are aware of their rights, who expect, and in fact receive, fair and efficient treatment, are more willing to comply with taxation”.
In Tanzania, Articles 16 to 24 of the Constitution contain basic rights and duties, including the right to equality, to privacy and personal security and the right to own property. Tax laws, by extension, do have provisions which echo some of the basic rights as protected under in the Constitution. Tanzania Revenue Authority (TRA) has adopted a Taxpayer’s Service Charter (now in its 8th Edition).
Through the Charter, TRA make promises of service level standards that they will implement to achieve high-quality service delivery. In the Charter, TRA also sets out the rights and obligations of the taxpayer as provided in the tax laws which they enforce, observe and respect. Below, I highlight the taxpayers’ rights and very briefly, my commentaries. In the next articles, I will cover taxpayers’ obligations and the TRA’s service level standards.
- Impartial treatment
The taxpayer has a right to an impartial application of the tax laws when fulfilling his tax obligation, to enable the taxpayer to pay the correct amount of tax, no more no less. So, in contesting tax decisions, the taxpayer needs to show how the tax law has not been applied correctly in his specific circumstances. He cannot just rely on the argument that the same tax law has not been applied to others.
- Privacy and Confidentiality
The taxpayer has a right to privacy and confidentiality for private and business information supplied to TRA unless the law allows the exposure of such privacy or confidentiality. Despite this being a legal right, the tax laws, do not provide a financial remedy in case TRA infringes this right. The extensive powers the tax laws give TRA for inspections, audits, information gathering, or information exchange with other tax authorities, arguably, tend to undermine the privacy of taxpayers.
- Presumption of Honesty
The taxpayer has a right to be presumed honest unless evidence to the contrary exists. The qualification, in a way, makes TRA’s stance on this right to depart from the “presumption of innocence” principle under both the common law and the Constitution.
- Objection of Tax Assessment
A taxpayer has a right to object to an assessment or any other decision made by TRA to the extent to which that right is restricted by the law. The requirements to pay a deposit before an objection to a tax assessment can be admitted limits full realization of this right. TRA’s discretionary powers in granting a waiver of the deposit requirement are practically limiting.
- Tax Incentives and Exemption under the Tax Laws
Taxpayers have the right to plan their tax affairs to obtain incentives and exemption allowed under the tax laws. However, the anti-avoidance provisions in tax laws and the TRA’s powers thereon, leave some uncertainties.
Taxpayer’s rights and obligations should go together. One should not override the other. Whilst non-compliance with tax laws is penalized, it is important is that the tax laws provide an opportunity for taxpayer’s rights to be easily realizable, accessed and above all protect them.
By Shabu Maurus, Tax Partner, Auditax International.