In exercising its statutory powers to administer tax laws in Tanzania, the tax authority (TRA) makes various decisions. If a taxpayer, for any reason, disagrees with a tax decision made by TRA, a tax dispute arises.  Generally, if a taxpayer disagrees with the TRA’s decision he is entitled, as a first step, to object to the decision to TRA before considering an appeal.

There is a three-tier appeal system in Tanzania – the Tax Revenue Appeals Board, the Tax Revenue Appeals Tribunal (TRAT), and the Court of Appeal of Tanzania (‘CoA’) – the highest court in Tanzania. So, decisions at the CoA are especially important to the stakeholders of the tax system in Tanzania. There are various reasons for this, but I will mention three.

First, the CoA is the final point for tax appeals. It is the highest court in Tanzania. The party that losses at the CoA cannot appeal further. There is a room, however, for a person aggrieved by the decision at CoA to apply to the CoA for a review. Sometimes, this route can be successful, but this is not the same as an appeal where a case is sent to the next or higher forum.

Second is a doctrine of ‘stare decisis’. A Latin for “to stand by that which is decided.” It is a legal doctrine that obligates courts to follow historical cases when subsequently deciding similar cases. Stare decisis ensures that cases with similar scenarios and facts are approached in the same way. Or, simply put, it binds courts to follow legal precedents set by previous decisions unless there is a strong reason for departure.

The third is that all lower courts are bound to follow the rulings (precedents) of the CoA (as the highest court in Tanzania). Therefore, decisions that the CoA makes become binding precedents or obligatory stare decisis for the lower courts, including those in the tax appellate structure.

From January to October this year, at least 13 tax cases have been decided at the Court of Appeal of Tanzania. Several lessons can be drawn from the decisions – some very general and some specific.

Even to the laymen like myself, the legal principle such as “he who alleges, must prove” or “innocent until proven guilty” is quite familiar and make a lot of sense. But these rules, arguably, don’t apply when it comes to the civil tax disputes. When a taxpayer disputes a decision – for example, a tax assessment – made by the tax authority, the burden of proof is on the taxpayer, not the TRA. Failure to provide key information or document at early stages (audit and objection stages) to TRA, may later have serious repercussions. At later stages of the appeal process, the taxpayer may not be allowed to produce and rely on new documents or evidence to prove his case.

Appeal on matters of tax law

The nature of tax disputes can vary. Some disputes are on facts – for example, whether or not a taxpayer paid the tax or the amount paid. And some can be on interpretation of the tax law – for example, the correct interpretation of the word “payment” under the income tax law (for withholding tax purposes). Only appeals on “point of law” (issues related interpretation or application of the tax law) can go to the CoA. That is, the CoA has no jurisdiction over appeals on factual tax disputes. Factual disputes end at the TRAT.

By Shabu Maurus, Tax Partner, Auditax International.