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May 15, 2020
Tanzania issues regulations on remission of interest and penalties
On 8 May 2020, the Government of Tanzania published the Tax Administration (Remission of Interest and Penalties) Regulations, 2020 with Government Notice (GN) No. 351.
The Regulations provide that the Commissioner General (CG) of the Tanzania Revenue Authority (TRA) may remit (reduce) the whole or part of interest or penalties assessed under the Tax Administration Act, 2015 (TAA, 2015) or any other tax law upon an “eligible person” making an application in the prescribed format showing good cause for remission, and paying the principal tax due by the date specified by the CG or such other date as may be extended under the TAA, 2015. Financial hardship shall not constitute good cause for remission unless the applicant has provided satisfactory evidence to prove that such financial hardship existed when the tax liability was due and payable under the tax law, was the sole reason for the applicant’s failure to pay such tax on the due date prescribed under the tax law, was communicated to the CG at the time when the relevant tax was due and payable, and will persist for an unforeseeable time in future.
Section 70 (1) of the TAA, 2015 grants powers to the CG to remit the whole or part of interest or penalties imposed under any tax law. Section 70 (2) of the TAA, 2015 empowers the Minister for Finance and Planning to make Regulations or an Order prescribing the eligibility, duration and procedure of accessing remission of interest and penalties by taxpayers.
Pursuant to Section 70 (2) of the TAA, 2015, on 8 May 2020, the Minister for Finance and Planning published the Tax Administration (Remission of Interest and Penalties) Regulations, 2020 GN No. 351.
The following are the highlights of the Regulations:
An eligible person is a person who:
Manner for applying for remission
An eligible person who has been assessed with interest or penalties under the TAA, 2015 or any other tax law is required to file an application with the CG for remission in the format prescribed in the Regulations.
The application shall disclose the reasons for the imposition of interest or penalties and the justification for remission.
Criteria for remission
The CG may remit the whole or part of the interest or penalties where the applicant has shown good cause in support of the application.
Financial hardship shall not constitute good cause for remission unless the applicant has provided evidence to the satisfaction of the CG to prove that such financial hardship:
Excluded interest and penalties
Remission shall not apply to the following categories of interest or penalties:
Decision of the Commissioner General
The CG may remit the whole or part of interest or penalties assessed under a tax law or may reject the application by giving reasons for the rejection.
The Regulations do not stipulate a timeframe for the CG to grant or reject an application for remission.
The decision of the CG is final and cannot be subjected to administrative review or appeal. This means that applicants may have limited recourse if the application for remission is rejected.
Payment of principal tax
An eligible person whose application for remission has been granted is required to pay the principal tax liability by the due date specified by the CG or any other day as may be extended under the TAA, 2015.
Cancellation of granted remission
The Commissioner General shall rescind his decision in granting remission of interest and penalties where a person:
Upon rescission of the remission granted, the CG shall issue a written notice demanding payment of the principal tax and interest or penalties in full as if no remission was granted. The written notice shall specify the due date for payment of the demanded principal tax and interest or penalties.
Any person who fraudulently or through misrepresentation acquires remission under the Regulations commits an offense and upon conviction shall be liable to a penalty or fine prescribed under the TAA, 2015.
For additional information with respect to this Alert, please contact the following:
Ernst & Young (Tanzania), Dar es Salaam
Ernst & Young Advisory Services (Pty) Ltd., Africa ITTS Leader, Johannesburg
Ernst & Young Société d’Avocats, Pan African Tax – Transfer Pricing Desk, Paris
Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London
Ernst & Young LLP (United States), Pan African Tax Desk, New York