Q&A – 10 November 2014

Tax documents retention

Our company had entered into a transfer arrangement in 2010, after which we underwent an audit by TRA in 2012. Documents for this arrangement were handed over to the TRA audit team. Two months ago we have been asked to resupply the same documents. Isn’t the 3 year rule to maintain documents applicable here and is TRA not time barred to make such a request?
ET, Dar

You are right to the extent that there is a time limit but it is of 5 years at the minimum not 3 years. Section 80 of the Income Tax Act addresses this and states that Unless otherwise authorised by the Commissioner by notice in writing, every person liable to tax under this Act shall maintain in the United Republic such documents – (a) as are necessary to explain information to be provided in a return or in any other document to be filed with the Commissioner under this Act; (b) as are necessary to enable an accurate determination of the tax payable by the person; and (c) as may be prescribed by the Commissioner. (2) The documents referred to in this section shall be retained for a period of at least five years from the end of the year of income or years of income to which they are relevant unless the Commissioner otherwise specifies by notice in writing.

TRA is hence not time barred and unless there is other information you have not disclosed to us, we recommend you cooperate and resupply the documents.

Choice of social security scheme

I am employed in a private company in Tanzania. My employer has an agreement with one of the social security schemes registered in Tanzania to register all its employees in that scheme. I don’t want to be a member of the scheme as I have a scheme of my own choice in another pension fund. Am I bound to accept the social security scheme that my boss has a contract with?
TK, Arusha

The Social Security (Regulatory Authority) Act, 2008 provides that, every employer in the formal sector shall be required to register his employees with any of the mandatory schemes, provided that it shall be the right of the employee to choose a mandatory scheme under which the employee shall be registered. Based on the foregoing provision, you are not bound by the contract that your employer has executed with the social security scheme. You can choose your own scheme.

Criminal liability of directors

If a company is charged under the National Security Act, can the directors or managers of the company be held liable? Are they not merely employees of the company?
JT, Mwanza

The National Security Act clearly states that where any offence under this Act is committed by a body corporate, then, as well as the body corporate, any person who, at the time of the commission of the offence, was concerned, as a director or officer, with the management of the affairs of such body corporate shall be guilty of the offence and be liable to be proceeded against and punished accordingly unless he proves to the satisfaction of the court that he had no knowledge, and could not by the exercise of reasonable diligence have had knowledge of the commission of the offence.

This Act provides for sentences upto life imprisonment and hence you should consult your legal advisor in case you are concerned about offences under this act.

Agreement to fix prices

There is a certain manufacturing industry where it is clear that the three big players are fixing prices. Is this not illegal?
AL, Dsm

The Fair Competition Act, 2003 provides that, a person shall not make or give effect to an agreement if the object, effect or likely effect of the agreement is price fixing between competitors. Price fixing between competitors means to fix, restrict or control the prices, tariffs, surcharges or other charges for, or the terms or conditions upon which, a party to an agreement supplies or acquires, or offers to supply or acquire, goods or services, in competition with any other party to the agreement.

Any person who intentionally or negligently acts in contravention of the provisions of this section, commits an offence. The Act provides for massive fines for such behavior.

Sonara cheating in grammage

I have been buying gold ornaments for years from a particular goldsmith (“sonara”) in Dar who has always been giving me great discounts. Three months ago, I went and bought two sets of earrings. After I left the sonara, I was unsure of the grammage of the earrings and I went back to get each of the earrings labelled with their actual weight. Fortunately or unfortunately I went into the neighbouring sonara shop believing it to be the one I had just come out of. Luckily the person there was very cooperative and agreed to measure the earrings for me. To my dismay the grammage was much less than what the sellers scale showed me meaning that his scale is deliberately calibrated to show more grammage and cheat customers. I think I have been cheated by this sonara for the past ten years. Is there no law that regulates the weighing scales that such sonaras use?
OP, Dar

There is a specific Act- the Weights and Measures Act that protects you. In fact such scales are to be regularly inspected and you have all the rights to report this to the Weights and Measures Agency (“WMA”) who will take appropriate action. The WMA can both fine and imprison such a sonara. You also have the right to report this to the police for investigation as this is a cause of concern for all purchasers of gold from such sonaras. Such a behavior amounts to a criminal offence which is imprisonable.