The Tanzania Revenue Authority has directed fuel stations, burea de change and insurance companies to install automatic electronic fiscal devices in a bid to increase efficiency in tax collection.

The EFDs will help curb tax evasion as sales transactions will be monitored electronically and receipts generated automatically whether or not a client asks for them.

According to Tanzania Revenue Authority director of education and taxpayer services Richard Kayombo, the decision to install the automatic EFDs especially at fuel stations was made after manual devices failed.

“Last year, we introduced the manual EFDs but they failed because petrol stations had the option of generating receipts for transactions carried out,” said Mr Kayombo.

Mr Kayombo said that some petrol stations, burea de change and insurance companies were avoiding generating receipts and so their actual turnover was not reflecting in their tax returns.

TRA was losing out on revenue because companies were not registering their transactions using the manual EFDs.

However, the automatic EFD’s will issue receipts immediately any transaction occurs, receipts which are reflected back to the authority.

“With this new technology, the government will increase tax collection and transparency in business data,” said Mr Kayombo.

Mr Kayombo said TRA has focused on petrol stations, burea de change and insurance companies because they have the largest operations in the country.

He said the automatic EFDs are specially made to register all transactions made and the government is optimistic that this will increase revenue collection in the remaining part of the year. Currently, the government collects Tsh400 billion ($250 million) per month in taxes.

The Citizen newspaper in May this year reported that Tanzania loses about Tsh3 trillion ($1.87 billion) in tax revenue every year through dishonest import and export transactions.

“The problem of tax avoidance and evasion is common in all tax systems but with the introduction of the new automatic EFDs, we expect to improve collections by at least 80 per cent,” said Mr Kayombo.

TRA principal officer Hamis Lupenja said the directive for petrol stations to use normal EFDs failed because if a receipt was not issued the transaction would not be recorded.

“However, with this device, installed inside the fuel pump, it will not matter whether a motorist demands a receipt or not, the tax is automatically recorded,” said Mr Lupenja. He added that it is an offence to buy anything without demanding a receipt and the buyer is liable to a penalty of Tsh1 million while a trader is fined Tsh3 million.

TRA Commissioner-General Rished Bade recently said that the authority has already held advanced talks with experts from a number of oil firms, insurance companies and burea de change over the matter and the response is good.

Directorate of Criminal Investigations Commissioner Isaya Mngulu, said his office was working with TRA by conducting crackdowns on business proprietors who are reluctant to install EFDs in their outlets.

Mr Mngulu said that in a span of two weeks, his office had closed down 11 shops in the city for breaching the directive. He warned those trying to avoid installing the EFDs that they risk being penalised.

Both the Value Added Tax Act, Cap 148 (VAT Act) and Income Tax Act, Cap 332 (ITA) provide for EFDs.