One-third deposit too high, waiver decision too late

I was recently assessed by the Tanzania Revenue Authority (TRA) for a tax liability of TZS 1.8 billion, which meant I was required to pay one-third of that amount approximately TZS 600 million in order to validate my intended objection against the assessment. The amount was simply too high, so I applied for a waiver in accordance with the law to allow me to move forward. However, TRA took a very long time to respond to my waiver application. By the time they finally replied, the timelines for me to proceed with my objection had already lapsed. I now feel completely stuck, as I could not proceed without the waiver and the delay was not my fault. Can I challenge this kind of inaction before the Board?

CK, Dar es Salaam

This is a very practical concern, and one that has recently been clarified by the Court of Appeal. For a long time, there has been uncertainty around whether matters relating to waiver, particularly rejections and delays in determining such applications could be challenged before the Tax Revenue Appeals Board (the Board). The Court of Appeal has now addressed this issue and provided much-needed clarity. Under the provisions of the Tax Administration Act (TAA), a taxpayer is not limited to challenging only objection decisions, but may also challenge other decisions or omissions of the Commissioner General. Reading these provisions of the TAA together with those of the Tax Revenue Appeals Act reveals that the Board’s jurisdiction extends to disputes arising from both action and inaction in the administration of tax laws. This position becomes even clearer when one considers the Tax Administration (General) Regulations. Regulation 95 expressly provides for the making of an application for waiver of payment, while Regulation 96 contemplates that such an application must be determined within a prescribed timeframe. These provisions underscore that a waiver application is not meant to exist in a vacuum. There is a corresponding duty on the TRA to act on it timeously.

The Court of Appeal has recently affirmed that where the TRA fails to act within such a framework, that failure may amount to an omission capable of being challenged. The Court was clear that taxpayers should not be left in limbo, particularly where the delay directly affects their ability to exercise statutory rights, such as proceeding with an objection. This decision provides a timely and practical guidance to the long awaited and much-needed clarification.

In your case, where the delay in determining the waiver application effectively prevented you from proceeding within time, there is a strong basis to challenge that inaction before the Board. However, each case is always decided depending on the circumstances surrounding it. We therefore advise you to consult your tax lawyer for more guidance having studied all the circumstances and correspondences, if any, between you and TRA.