Comments on the New Tax Remission Regulations

Author: Crispin Mwebesa
Dated: May 11, 2020
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  1. The Minister of Finance and Planning has, through the provisions of Section 70 (2) of the Tax Administration Act, issued the above mention Regulations, G.N. No. 351 of May 8, 2020 (the Regulations).
  2. The Regulations provide for procedures of implementing the provisions of Section 70 of the Tax Administration Act as amended by the Finance Acts of 2017 and 2018 (the Act). In a nutshell, the said provisions provide for remission of interest and penalties.
  3. Loosely, remission is a situation where one, upon application to the Tax Authority, can be granted with a permission not to pay part or whole of the tax(es) and associated interest and penalties which are due for payment. As already stated, the Regulations relate to the remission of interest and penalties only.

Key Regulations

  1. Applicability The Regulations are applicable to a person who has been assessed with interest under the Act or any other tax law. To trigger the operationalization of the Regulation, a person who has been assessed with interest or penalties shall apply to the Commissioner General using the prescribed form under the Regulations. The application should disclose reasons for imposition of interest and further justifications for the remission.
  2. Eligibility, the following criteria must be met: –
    • Voluntary disclosure of tax liability;
    • No pending objection or appeals related to the remission;
    • Payment of the whole principal tax liability related to the remission;
    • Declaration of all previous outstanding tax liability; and
    • Filing and submission of an application using the prescribed form
  3. Determination and Criteria for Remission
    • Determination: The Commissioner General, in determining the application for remission, may either grant the application; or reject the application; or remit the whole or part of the interest/penalty.
    • Criteria:The Regulations provide that there must be good cause in support of the application. Generally, however, financial hardship does not constitute good cause except where the financial difficult;
      • existed when tax liability, subject of the application, was due and payable under the law.
      • was the sole reason for the applicant’s failure to pay such interest/penalty.
      • was communicated to the Commissioner General when the relevant tax was due.
      • will persist for unforeseeable time (not less than a year)
  4. Interest and Penalties arising from the following are excluded;
    • Order of compounding an offence;
    • Breaches related to Electronic Fiscal Devices (EFDs)
    • Tax evasion;
    • Tax audit/investigation;
    • Failure to pay withholding tax under the Income Tax Act; VAT under the VAT Act; Excise Duty under the Excise Tariff Management Act or any tax where the applicant has a statutory obligation to pay as an agent of TRA;
    • Penalty for failure to file tax return under the Act; and
    • Penalty for failure to maintain documents as required by the Act.
  5. Cancellation of granted remission: Reasons for cancellation are: –
    • Fraud and Misrepresentation
    • Failure to pay the principal tax related to remitted interest/penalty.
  6. Finality of Remission Determination: The decision by the Commissioner General is not subject to administrative review nor appeal.

Our Views and Comments on the Regulations

  • In the face of the unprecedented economic crisis occasioned by the Covid-19 pandemic, we find this move by the Government to be laudable. This is so because the move shall cushion the economic impact of the pandemic on businesses in the hard-hit sectors such as Aviation, Tourism and Hotel Industry, Manufacturing, Transportation, Financial Services and Retail. Moreover, businesses need to be wary when advancing the financial difficult resulting from the pandemic in support of their application for remission. Financial difficult will only be accepted as a reason for remission on exceptional basis and upon satisfying strict conditions set by the Regulations as indicated in paragraph 6(b) above.
  • The Regulations are silent on the timeline within which the Commissioner General shall determine the application for remission. In the same vein, the Regulations are silent on what happens to interest and penalties which form the subject of the undetermined/pending applications. It remains to be seen how the Commissioner General will deal with such gaps.
  • In the ordinary, a subsidiary legislation would provide necessary details for smooth implementation of the provisions of the principal legislation. Unfortunately, “good cause” being a criterion of the remission, has not been defined by the Regulations. This has been left to the discretion of the Commissioner General. Time will tell whether this will end up being a quagmire to the tax payers.
  • We find the list of exclusions (see paragraph 7 above) to be too broad and all-encompassing. It excludes penalties and interests from almost all tax legislations. It was hoped that the Regulations would enhance compliance by the tax payers and further boost tax collection by the Authority. In our opinion, for example, it is not clear why penalties resulting from failure to file returns are excluded. Most of the SMEs currently not operational would have regularized their tax status. This would have encouraged activities in the SME space and as such expanding the tax base.
  • The determination by the Commissioner General is not subject to administrative review or appeal. This is contrary to the principle of fairness enshrined in our laws. The principle guarantees a right to challenge the decisions / actions of the administrative organs similar to Tanzania Revenue Authority using the existing legal mechanisms. Other jurisdictions have afforded applicants for remission a right to challenge the refusal to grant remission. It was hoped that this would be the case in Tanzania.


While we applaud the Government for the move in the right direction, we note here that remission is not a trivial issue to be treated with levity. We are of the view that there is still an opportunity to improve the Regulations and make them more robust. The improvement will enhance compliance and further boost the tax collection. Equally, for all those intending to apply for remission, a proper legal advice should be sought, and appropriate attention should be paid to reason in support of the application, timing of the application, and disclosures to be made among others.

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