Q&A – 23 September 2019
Tax offence as economic offence
My uncle is a businessman and was recently arrested for tax evasion and charged under the Economic and Organised Crime Control Act. Before his arrest, other business people in the same locality were arrested for the same offence but were charged under the tax laws. What makes an offence economic? Is it the investigator, the prosecutor or the law that makes a tax offence or other offence economic? When does a tax crime becomes economic and when does it becomes an ordinary criminal case? I am told that multinational companies are not exposed to this because of treaties and other instruments in place? Is this true and why the discrimination?
TE, Dar
The First Schedule to the Economic and Organised Crime Control Act (Act) contains a list of economic offences. It is the schedule that makes a crime economic. Tax evasion is not one of the economic offences listed in the First Schedule to the Act. However, because tax evasion causes loss of revenue to the Government, a prosecutor may, instead of charging the offender under the tax laws, charge him with offence of occasioning loss to a specified authority contrary to paragraph 10 of the First Schedule.
Tax laws provide light sentences compared to the penalty provided under the Act. Therefore, there have been times where the prosecutor prefers charging the offence of tax evasion as occasioning loss to specified authority under the Act as it attracts a bigger penalty.
A tax crime can also turn out to be an economic case if it is charged along with any offence listed in the First Schedule to the Act. Once there is one economic offence in the charge sheet, the entire case becomes economic. For example if a tax offence is charged along with money laundering which is now an economic offence, the whole case becomes economic.
Another way of making a tax offence or any other offence economic is by charging the accused with the offence of leading organised crime contrary to paragraph 4 of the First Schedule to the Act along with any crime committed. If the prosecution alleges that the tax crime was committed in an organised manner and the accused took part in the criminal racket directly or indirectly, the charge becomes economic. The offence of leading organised crime covers all the offences and it can be used by investigators and prosecutors to make any offence economic by charging it along with the crime alleged.
Hence it is true that investigators or prosecutors may make a tax crime or any ordinary crime become economic though such offences are not in the list of economic offences in the First Schedule.
Lastly the law does not distinguish between multinational companies and local ones. All that is stated above applies to both multinational and Tanzanian entities. Hence the issue of discrimination does not arise.
Detained in police station for traffic offence
I was stopped by police officers who shockingly did an alcohol test on me. The results were positive and I got arrested and spent the night in police custody. Can they arrest me for this offence? Could they just not have fined me and let me go? Is this legal?
TT, Dar
The Road Traffic Act states that any person required to provide a specimen of blood for a laboratory test pursuant to the provisions of this Act may thereafter be detained at a police station until it appears to a police officer that the proportion of alcohol in the person’s blood does not exceed the prescribed limit. For the purposes of this Act, the expression “prescribed limit” means eighty milligrams of alcohol in one hundred millilitres of blood.
You can see that your arrest was legal to also protect you. There is nothing shocking about alcohol tests- they are now quite common in Dar.
Confidentiality of documents submitted to TRA
I submitted some very sensitive documents including business and feasibility plans to the Tanzania Revenue Authority (TRA) for them to look at my tax affairs. Can the TRA share such documents with my competitors as these documents contain our business secrets and how we conduct our affairs. We have no issues with TRA reviewing them, but what are the chances the TRA will share these with other companies to gather further intelligence? We even forgot to put a stamp reading confidential on the documents. Can I sue TRA if they leak my information?
QU, Mwanza
What you submit to the TRA becomes confidential with or without your stamp on it. The TRA cannot use this for any other purposes then tax collection. For example TRA cannot share the document with your competitors, although TRA can appoint third party experts to assist it in the carrying out of its duties and the third party will also be bound by confidentiality.
In fact section 8 of the TRA Act states that Revenue Commissioner, or any other Commissioner or person employed in the carrying out of the provisions of this Act shall regard and deal with all documents and information relating to the income, expenditure or other financial dealings or status of any tax payer or other person involved in any operations in furtherance of the purposes of this Act, and all confidential instructions in respect of the administration of this Act which may come into his possession or to his knowledge in the course of his duties, as secret to any unauthorised person.
The TRA is a corporate body with a seal and can be sued and can sue. If at all it engages in such information leakage you have a right to sue it. Having said that and to be fair, we must state that we have not heard of any such instances where TRA leaks information to the taxpayer’s competitors.