Q&A – 17 January 2011
TRA not respecting the law
I have entered into an agreement with an agency of the government for a project of national importance running across Tanzania. I was given certain exemptions for the project that I cannot unfortunately disclose to you because of a confidentiality agreement. For the first two years the Tanzania Revenue Authority (TRA) accepted the exemptions and granted the waivers. Since July 2010, the TRA has refused to recognize the agreement saying that the exemptions are not valid anymore although the contract is still running. The TRA claim that there is a new law that overrides the contract. How can the same arms of the government not be on the same page? What should I do? We are a large company and came to Tanzania because of the incentives we were offered. How can these just be taken away from us? It makes the whole project calculation redundant.
LO, Dar
Normally exemptions by the government are not secretively held and this confidentiality clause specifically related to the exemptions is quite surprising. Should we have known what the exact exemption was we could specifically guide you as you are not the first one affected by such disconnect between the TRA and a government agency.
First and foremost, what prevails over any contract is the law. The law is supreme and no contract, howsoever sweetly drafted can override the law. Your situation from a legal perspective is that you have a contract that says one thing, and the law in force contradicting the contract. According to TRA, the law prevails which is the general principle that applies and is correct. You cannot just freeze the law- it is ever changing.
If your entire project depended on the exemptions that you have mentioned, then you have acted in reliance of these and have a cause of action against the agency that signed the contract and can sue the agency. However this might turn out to be time consuming and costly.
In our experience, if the project is of national importance as you claim, a quick meeting between the TRA and the agency and its parent ministry will be useful.
If you are under the Tanzania Investment Centre (TIC) Incentives, then you can also involve the TIC. Of course if there is a discrepancy between the law and the contract, you cannot out rightly blame TRA as they are following the law.
To give you a background on the misuse of exemptions, there are reports that a large portion of the exemptions are misused and the government and TRA are coming under intense pressure to address this. It is also claimed that Tanzania gives the highest number of unnecessary exemptions that are not adding real value to the economy at large and are in fact hindering tax collection. Obviously such unscrupulous behavior by some investors tend to hurt the performance of genuine players like yourselves.
All in all, should this meeting not work, you have a cause of action against the agency you entered into a contract with and should proceed to sue them. We would recommend you sue them in the High Court, Commercial Division.
Maintenance order against father
I have been in a relation with a man for the past two years and have just delivered a baby boy. As is typical of the male, I have been deserted and left to look after the child alone. I am finding it hard to make ends meet. Should the father not also contribute to the well being of the child? What options do I have?
DL, Moshi
Under the Law of Child Act 2009, an application for maintenance order may be made against the alleged biological father to the Court in respect of the child by the expectant mother, at any time before the birth of the child; at any time within twenty four months from the birth of the child; at any time after the birth of the child upon proof that the man alleged to be the biological father of the child has within twenty four months after the birth of the child paid money for its maintenance; at any time within the twenty four months after the return to Mainland Tanzania of the man alleged to be a biological father of the child, upon proof that he ceased to reside in
Tanzania before or after the birth of the child.
The act further states that the Court shall refuse to grant a maintenance order unless it is satisfied that there is a reasonable cause to believe that the man alleged to be father of the child is in truth the father and in fact the father of that child and that the application for a maintenance order is made in good faith and not for any purpose of intimidation and extortion; and the man alleged to be the father of the child has been requested by or on behalf of the applicant, to make provisions for maintenance of the child and has refused or neglected to provide maintenance, or has made inadequate provisions.
Based on the above, you have a good case and should proceed to make this application.
Who has to prove a tax appeal
Sadly TRA blindly issued an assessment and I have had to fight it at the Tax Revenue Appeals board. I was surprised to be informed by my tax consultant that we were to present our calculation to the board first and we would have to disprove the TRA, as opposed to other parts of the world where the tax authority would have to prove its case first. Is this a fact or is it a ploy by my consultant to make some easy money from me?
PL, Dar
The Tax Revenue Appeals act is very clear in that the onus of proving that the assessment or decision in respect of which an appeal is preferred is excessive or erroneous shall be on the appellant. Your tax consultant is correct since you are the appellant. TRA in your instance is the respondent.
We have never heard of a judicial system, even in these so called ‘other countries’, where the respondent would start presenting its case first. We must also warn you that these are government revenue matters and the tax revenue appeals board is a no nonsense body and cases are all fast tracked there.