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”. That is taxpayers are more willing to perform their tax obligations.
Taxpayer’s rights and obligations should go together. One should not override the other. It is important is that the tax laws provide an opportunity for taxpayer’s rights to be easily accessed and realized. And above all fully protected. My article last covered taxpayers’ rights. But you need to know both your rights and your tax obligations. To be compliant with tax laws, you need to be aware of your tax obligations. These are expected behaviours that are legally binding and enforceable.
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 and sets out the rights and obligations of the taxpayer. Below, I highlight the taxpayers’ obligations and very briefly, my commentaries.
Register: You must register under the tax laws when you become eligible (i.e., if you meet the criteria prescribed in the tax laws). And, in some cases, deregister when you become ineligible after your registration. There are various tax registrations such as Taxpayer Identification Number (TIN), generally required when you become or may potentially become taxable or have taxable income. Value Added Tax Registration (VRN) is mandatory when, for example, your annual business taxable turnover reaches 100 million shillings, or when you are in a business of supplying professional services. In some cases, you may also be obliged to register before you can access some online tax platforms such as the revenue gateway system (for tax payments) and the recent e-filing system.
File tax returns: Once you are registered for tax purposes, you must file relevant tax returns within the periods stipulated under the respective tax laws. Different tax laws have different tax returns and their due dates. Most tax returns can now be filed online (i.e., the e-filing system). This essentially means that now tax returns can be submitted almost any day and any time before their due dates.
Be accurate, truthful, and complete: When filing tax returns or making customs declarations or lodging tax refund claims, you are obliged to ensure that such returns, customs declarations, or refund claims are true, accurate and complete. Underdeclaration of tax or overclaim of tax refunds may attract penalties and interests. And, if done fraudulently, may be treated as tax offence.
Pay taxes on time: You must pay your taxes on time as they fall due. Later payment of tax may attract interests and in some cases penalties. Poor cash flow management may be among the reasons for late payment of taxes. You need to plan for various taxes, the amounts due (or estimated), their due dates and sources of funds.
Issue or demand EFD receipt: EFDs have become topical nowadays. As a seller of goods or service, you are obliged to issue a fiscal receipt (or tax invoice) and as a buyer, you must demand a fiscal receipt (or tax invoice). The penalties for non-compliance can be severe.
Cooperate with TRA Officers: You are obliged to cooperate with TRA officers. Disclose or produce relevant information or documents when required and let them perform “their lawful duties without intimidating, abusing, mistreating, threatening or influencing them in any manner whatsoever”. Impeding tax administration is an offence under the tax laws.
By Shabu Maurus, Tax Partner, Auditax International.