Tax Dispute Settlement Procedures in Tanzania

Essay, 2018

22 Pages


Table of Content


The meaning of Tax?
Justification to Taxation
Legality of Taxation
The Rationale of Imposing Tax
Tax Dispute Settlement Mechanism
Legality and Fairness Principle
Procedures of Tax Dispute Settlement Procedures
Procedures of Institution of appeal to the Board
Procedures of Institution appeal to the Tribunal



Tax dispute implies the general conflict or disagreement between tax authority and tax payer arising from the decision of commissioner general. Such disagreement is normally caused by either poor interpretation of statutes or tax avoidance.

Tax Payment is a mandatory requirement for every person who has income derived either from employment, business or investment in the year of income as provided under section 4(1) of Income Tax Act [Cap 332 R.E 2016. Tax collection is mandated to TRA and its implementation lies on various tax officers and commissioners. Tax decisions in Tanzania are in the legal capacity of the Commissioner General of TRA.

The knowledge of Tax Dispute Settlement is an important phenomenon to both tax authority and tax payers as it fosters efficiency in Tax Administration. With that view these presents intends to discuss tax disputes mechanisms in Tanzania with the precise intent of ushering knowledge of procedures with regards to tax dispute settlement mechanism.


In a general sense, a tax is any contribution imposed by the government upon individuals, for the use and service of the state, whether under the name of toll, tribute, tallage, gabel, impost, duty, or other name.[1] The discussion on Tax Dispute Mechanism is important phenomena following the fact that its implications amounts to costly outcome financially especially to tax payers and the government as well. Such discussion is even more relevant now given the fact that the current government focuses much on tax collection having zero tolerance on non-compliance with tax laws[2]

This presents is categorized into six main parts, where part of this of work introduces the concept of tax, its legal justification, legality and the relevancy of taxation. Part two discusses the general context of Tax Dispute Mechanism, legality and fairness principle with regards to the Tax Statutes. Parts three ponders on the procedures on Tax Dispute. Part four details the procedures of institution of appeal to the Board, whereas part five details procedures of institution appeal to the Tribunal and Finally Part Six concludes the work.

The meaning of Tax?

Tax is a mandatory or compulsory contribution to the support of the government. It is levied on various entities such as; persons, properties, income, commodities and on various transactions. Tax levy is exclusively responsibility of the state by virtue of its sovereignty to impose tax for the purpose of funding government services and public projects. Alternatively it is defined as, “compulsory monetary contribution to the state’s revenue, assessed and imposed by a government on activities, enjoyment, expenditure, income, occupation, privilege, property, etc.., of individuals and organizations,”[3] Section 3[4] states that, “Tax has the meaning ascribed to it under section 78[5] ” where section 78(1)[6] defines Tax to mean the following; a) income tax imposed under section 4(1)[7] including the amounts payable by withholding agent or withholdee under Division II by an installment payer Division…and on assessment under Division IV of this Part; b) interest and penalties imposed by assessment Division I of Part VIII; c) an amount required to be paid to the commissioner in collection from a tax debtor under section 112(9) or 128(3); and d) an amount to be paid to the Commissioner in respect of a tax liability of a third party under section 5(2). 116(3) or (4), 117(2) or 118(1) or (3) of Income Tax Act respectively.

Justification to Taxation

Justification pertaining taxation is referred to the social contract theory developed by Jean Jacque Rousseau which suggests that people surrendered their freedom to a specific group of people to lead and protect them and their properties. In turn this group of people demands the power to collect finances in order to perform their duties of leading and protection of their properties and life. In that regards taxation is a necessary consequences of the existence of such group of people who are entrusted to protect properties and life of people. Rousseau propounds that in dispensing its duty the governing body is continually confronted with new demands from citizens and interest groups. All these demands commands expenditures thus more citizens’ income in form of taxes is required to provide for the new projects[8]. Rousseau conceives the State as a body aiming at the well- being of all its members and subordinates all his views of taxation to that end[9]. Rousseau suggests that he who has only necessaries should not be taxed at all; superfluities should be supertaxed; there should be heavy imports on every sort of luxury.[10]

Legality of Taxation

Taxation has intrusive or forceful nature, it has mandatory nature therefore it requires the regulation of law. Legality of paying tax is found under article 138[11] the provision of which implies that no tax of any kind shall be imposed unless by the law enacted by the parliament. In Roshani Meghji v Commissioner General of TRA[12] it was stated that, “Taxation is sovereign power to realize revenue to enable the government to discharge their obligation. The power to do so is derived from article 138[13]. In Bidco Oil & Soap Ltd v Commissioner General of TRA [14] it was rulled that, “you cannot impose tax where there is no provision of the law. And in Bulyanhulu Goldmine Ltd v Commissioner General of TRA [15] the judge stated, “In ordinary life Taxes are in fact complex as life itself, they are derogation of personal rights and property interest worldwide therefore no tax can be levied and collected without the authority of the law”

Speculating from the definitional meaning of tax the immediate findings are featured in the following components; Tax is a compulsory contribution, collected from people, properties, income and transaction, levied by the state by virtue of its sovereign power.

The Rationale of Imposing Tax

Every activity that is conducted by the governments of states attracts massive investment of funds. Governments impose taxes on their citizen to afford their responsibilities. Taxes enable the government to a mass of money needed to meet expenses to run various services provided to citizen[16]. Taxes enable a government for perfume the following services:

- Money earned from tax enable a government to build all the infrastructure projects needed to run the country[17]. Things like roads, railways, bridges, flyovers, subways, dams and many other related projects can possibly be constructed when money is available. Money is not only needed for the construction but also for the maintenance of these structures.
- Maintaining public security department is also big responsibility of the government. These include police, the fire men, and the army. Revenue earned through taxes helps to sustain these departments.[18]
- The government is also responsible for maintaining general services like Municipal and Council services. Inflow of money from imposed taxes helps to maintain these essential services. Another major responsibility of the government is to provide quality and affordable health services. All these amounts to enormous expenditure[19]

The only way government can manage to meet these expenses is by collecting it from its citizens. These expenses are very important for the welfare of the citizens. By payments of taxes people denies some of their rights in order to make contribution to the government activities and projects; meaning people are contributing for the national cause.

Tax Dispute Settlement Mechanism


Tax Dispute implies a misunderstanding, conflict or disagreement with regards to the decision of the Commissioner General which is caused mainly by poor interpretation of tax statute or tax avoidance. Tax statutes are applied and interpreted by the Commissioner General in order to make assessment and determine tax payable to various entities. In the circumstance such interpretation of tax statutes by the Commissioner General; a tax payer may find himself in a situation whereby he develops questions as to whether he should pay tax or not and as to what amount of tax he is supposed to pays.

We have already shown that tax is a mandatory requirement. It is also important to bear in mind that it is in the legal responsibility, capacity and ability of the Commissioner General to assess or adjust tax payable, subject to the provisions of sections 46[20], which retains power of assessment to Commissioner General, section 48[21] which empowers the CG to make adjustments and section 47[22] which addresses the type of assessment the CG can make. Therefore while interpreting tax statute as a process of determining tax payable, disputes arises; this always leads tax objections and tax appeals.

Tax Dispute mechanisms mainly focuses on decisions and appeals. Section 50(1)[23] confers power to the Commissioner to make any decision pertaining to tax including assessment or other decision which are left to his discretion, judgment, opinion, approval, consent, satisfaction and determination under a tax law that directly affects a person. However section 50(2)[24] provides for the assessment and decisions which are excluded under the provision of subsection 1 which are; practice note or any decision involving issuing or revoking practice note, a decision or omission that affects a person as tax officer, employee or agent of the authority, or decision regarding the compounding of offence under any tax law.

Legality and Fairness Principle.

Generally tax statutes are drafted in adherence to the principle of fairness and legality subject to articles 13(6) (a)[25] and 138[26]. Article 13(6) (a)[27] afford person the right to fair hearing and right to appeal in case aggrieved by a decision. In support of article 13(6) (a)[28] section 51[29] and 52[30] provides that all objections on tax decision may be appealed to tax board and tax tribunal. Usually the principle of fairness and legality leads us to objections and appeals.

The principle legislations dealing with Tax Dispute Settlement in Tanzania are Tax Administration Act[31], Tax Revenue Appeals Act[32], Tax Revenue Appeals Board Rules[33], and Tax Revenue Appeals Tribunal Rules[34]. These legislations answer 5Ws questions. What to appeal? Who to appeal? Where to appeal? When to appeal and How to appeal?

a) The Tax Administration Act[35]: The principle objective of this Act is to consolidate provisions relating to tax administration with a view to easing the administration of tax and enforcement of tax laws by the Tanzania Revenue Authority and to introduce currency point system in tax administration and to provide matters incidental thereto.

b) Tax Revenue Appeals Act[36]: This as an Act which establishes Tax Revenue Appeals Board and Tax Revenue Appeals Tribunal and to provide for related matters.

c) Tax Revenue Appeals Board Rules[37]: These are the rules which establish procedures to be taken in the process of objecting decisions made by the Commissioner General.

d) Tax Revenue Appeals Tribunal Rules[38]: These are the rules which provides for the procedural steps to be taken when aggrieved by the decision of the board.

Procedures of Tax Dispute Settlement Procedures

The process of appeal falls under four basic procedural steps which are;

1) Tax Decision by the Commissioner General

2) Board Decision

3) Tribunal Decision and

4) Court of Appeal Decision

Tax Administration Act answers the 5Ws in the following manner;

1) What to appeal?

Section 50(1) and (3)[39] confers power to the Commissioner General to make any tax decision including assessment and other decisions which are put under his powers according to the law. By the application of the principle of fairness under article 13(6) (a)[40] such decisions are appealable.

2) Who to appeal

Any person who is aggrieved by the decision made under section 50(1) and (3) by invocation of article 13(6) (b) has the right and can appeal against such decisions.

3) When to appeal

Section 51(1) provides that any person aggrieved by the decision made by the Commissioner General may object the decision by filling an objection to the Commissioner General, within thirty days from the date of service of the tax decision. In the event that the time has lapsed, the law affords an opportunity to the affected person to file application for extension of time provided that such person has reasonable grounds to make such application as per the provisions of section 50(2)[41]

The provisions of sections 12, 13, and 14[42] of the Tax Revenue Appeals Act have been repealed and replaced by sections 51, 52 and 53[43]

Where should a person appeal?

The person has to lodge his appeal first to the Commissioner General in the first instance. When aggrieved by the decision of the Commissioner General with regards to his objection then the aggrieved person may adopt the second attempt; to lodge his appeal to the Tax Revenue Appeal Board. When aggrieved by the decision of the board the third attempt is to lodge the appeal to the Tax Revenue Appeals Tribunal, when not in tandem with the decision of the tribunal, the aggrieved party has to lodge his appeal to the Court of Appeal of Tanzania as the last resort of settlement.

How to appeal?

They are various necessary procedures which are provided by the law. This part details those procedures in the following manners;

i) Objection to the decision of the Commissioner General:

Tax dispute settlement begins with the decision of the Commissioner General as per section 50(1) and (3)[44]. Section 51(1)[45] affords an opportunity to any person aggrieved by the decision made by the Commissioner General to file an objection of that particular objection to the Commissioner General within thirty days from the date on service of the decision. When there is a need to apply for extension of time, a person with reasonable grounds has opportunity to do so subject to section 50(2)[46] and Commissioner General has legal capacity to afford time to the applicant as per section 50(3)[47]

It is the requirement of the law that the one who is objecting the decision must deposit 1/3 of the assessed tax, which ever amount is greater. Or he must deposit an undisputed amount of tax payable. Such requirement is provided under section 50(5)[48]. Njake Enterprises and Oil Transport Ltd v Commissioner General of TRA [49] , adopted the provision of section 50(7)[50] which states, “When a tax payer files and objection and make payment under subsection 5 then the liability to pay tax shall be suspended until the objection is finally determined”

The objection to the decision of the tax decision by the Commissioner General can be submitted based on the substantial and procedural grounds. On substantial capacity the possible grounds are;

i) Wrong application of the law
ii) Tax assessment is time bad subject to section 94(6)[51]
iii) Error in computing tax payable
iv) Assessment is based on an incorrect information
v) Assessment has not taken into account tax which is already paid in respect of the same liability and
vi) Commissioner has refused to offset the tax against unpaid tax credit or unpaid tax refunds.

On procedural capacity the possible grounds could be;

i) Assessment was not properly served
ii) Assessment was made to the wrong person or entity
iii) Deadline for paying the tax braches the law
iv) Assessment is not complying with the assessment format and
v) Any other reasons which is not referred to substantive reasons

An objection to tax decision shall be made in writing stating the grounds upon which it is made as per section 50(4)[52]


[1] The Law Dictionary, Featuring Black’s Law Dictionary Free Online Legal Dictionary 2nd Ed, accessed in

[2] Makundi, S. Tax Dispute Resolution in Tanzania, Thursday, August 25, 2016, retrieved on

[3], accessed on 7 July 2018

[4] Income Tax Act [Cap 332 R.E 2016]

[5] Ibid

[6] Ibid

[7] Ibid


[9] Jean Jacques Rousseau (1712 -1778). Social Contract & Discourses. 1913, retrieved on

[10] Ibid

[11] The Constitution of United Republic of Tanzania, 1977 as amended form time to time

[12] CAT, Civil Appeal No 49 of 2008

[13] Supra note 1

[14] Civil Appeal No. 89 of 2009

[15] Civil Appeal No. 89 & 90 Consolidated, CAT, Dar-es-salaam, Unreported

[16] Sandra, Why Do Government Collect Tariffs/ Why Do Government Impose Taxes, January 2011, accesses in on 7 July 2018

[17] Ibid

[18] Ibid

[19] Ibid

[20] Tax Administration Act, No. 10 of 2015

[21] Ibid

[22] Ibid

[23] Ibid

[24] Ibid

[25] Supra note 6

[26] Ibid

[27] Ibid

[28] Ibid

[29] Supra note 15

[30] Ibid

[31] Supra note 19

[32] [Cap 408 R.E 2010]

[33] Government Notice No. 217 of 2018

[34] Government Notice No. 222 of 2018

[35] Act No. 10 of 2015

[36] [Cap 408 R.E 2010]

[37] Supra note 28

[38] Supra note 29

[39] Ibid

[40] Supra note 6

[41] Tax Administration Act

[42] Supra note 27

[43] Supra note 15

[44] Ibid

[45] Ibid

[46] Ibid

[47] Ibid

[48] Supra note 15

[49] (2002) 2 TTLR 224

[50] Supra note 15

[51] Supra note 2

[52] Supra note 15

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Tax Dispute Settlement Procedures in Tanzania
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Tax, Tanzania, Dispute, Money
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Francis Mbago (Author), 2018, Tax Dispute Settlement Procedures in Tanzania, Munich, GRIN Verlag,


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