Magufuli tax evasion crackdown yields fruit

Sunday December 13 2015

The government's new measures to curb tax evasion have helped the Tanzania Revenue Authority collect over Tsh1.3 trillion in less than two months.

President John Magufuli has cracked the whip on TRA and Dar es Salaam port senior officials who were suspected of colluding with business people to import thousands of containers without paying taxes.

As a result of the crackdown, at least 20 officials accused of involvement in the illegal network have been sacked and most of them charged with abuse of office.

Officials of Azam Inland Container Depot (ICD), owed by prominent businessman Said Salim Bakhresa, were also charged alongside TRA officials for economic sabotage and causing loss of Tsh12.7 billion in unpaid taxes.


President Magufuli has also suspended TRA commissioner-general Rished Bade pending an investigation into the loss of 349 cargo containers worth Tsh80 billion. The containers were cleared without payment of taxes at the Dar es Salaam port.


Treasury sources told The EastAfrican that the collected Tsh1.3 trillion came from unpaid taxes for cargo cleared from the Dar es Salaam port in the past one year and big and medium businesses that had been evading taxes for at least the past five years.

“We are closely monitoring the trend and it seems the future is promising. The biggest challenge for the government is to expand tax base and introduction of new sources of revenues, but the recent collection is unprecedented,” the source said.

The government collected revenue to cover three-quarters of the government expenditures at $6 billion in 2014 but donor-dependence remained high while the government struggled to find new resources to invest in infrastructure development and social services.

President Magufuli said he wants his government to restore tax collection systems to shore up the country’s economic growth.

He said the new revenues would help the government provide services to the poor people and fund new investments in infrastructure.

The government has already identified business people suspected of clearing containers from the Dar es Salaam port without paying taxes, and directed them to pay immediately lest the government press charges on them.

Retired president Jakaya Kikwete on Wednesday came out to defend his administration, saying that neither his family nor close associates were involved in tax evasion at the Dar es Salaam port.

“I have never issued a directive favouring those who were supposed to pay taxes not to pay taxes or clear containers at the Dar es Salaam port without paying taxes. Those who are accusing me of such are wasting their time,” Mr Kikwete said.

TRA officials, however, could not reveal to The EastAfrican the amount of taxes collected since the crackdown started nearly a month ago.

According to Richard Kayombo, the Tanzania Revenue Authority’s director for taxpayers services and education, TRA had boosted efforts towards realising the 2015/2015 revenue collections amounting to Tsh12.3 trillion. Measures will include door-to-door visits to businesses, freezing bank accounts of tax evaders, confiscation of properties and prosecution.

“TRA does not review revenue forecasts midway but rather works towards achieving the target and beyond. New ways planned to reduce revenue leakage include 100 per cent inspection of imports, strict control of ICDs and clearing and forwarding agents and closer monitoring of staff including regular transfers,” said Mr Kayombo.

President Magufuli failed to name finance minister when he announced his new Cabinet on Thursday; an insiders said, appropriate candidate who suits the president’s requirements for the job has not been identified.

READ: Magufuli names lean Cabinet, warns new ministers must deliver


The critics said it was imprudent of President Magufuli not to name a minister for such an important portfolio since many decisions at the Central Bank, BoT and other key department of the ministry cannot function properly without a minister.

However, it is unclear whether the new efforts would persuade donors, who have been unhappy with the way the government was managing public funds.

Diplomatic sources said the United Kingdom and Germany had pulled out of General Budget Support (GBS) and Canada was rethinking GBS as the best form of aid and whether it should continue with it.

The World Bank and the Chinese government seem to have been the only partners the government could turn to in recent days.

Bella Bird, the World Bank country director for Tanzania, Burundi, Malawi and Somalia told The EastAfrican; the new government is showing good signs of putting the right building blocks in place to support national priorities. 

The current emphasis on improved governance by reducing non-priority spending and plugging loopholes in government revenue collection underscores the new government’s focus on strengthening macroeconomic stability and fiscal sustainability, Ms Bird told The EastAfrican.