Is the Taxman in Tanzania Ready to Tax New Technological Sectors?

“Is the taxman in Tanzania ready to tax emerging technological sectors?” this was the question asked by Prof. Honest Ngowi in his paper presentation during the launching of WAJIBU’s 3rd Accountability Reports on 28th June, 2019 at Morena Hotel in Dodoma.

Prof. Ngowi who currently is the Principal of Mzumbe University – Dar es Salaam Campus asked that question particularly to Tanzania Revenue Authority (TRA) who are legally tasked with the management of the Country’s tax revenue collection.

According to Prof. Ngowi, there has been quite a number of technologies that are changing almost everything and even the ways that things are done in the country and they have quite a number of tax implications.

“We are seeing quite a number of emerging technologies that are disrupting almost everything, we are seeing digital economy disrupting a lot of business models. In the transportation sector, we are no longer talking of normal taxi, we are talking of “uber” and “taxfy” as in the financial sector the language now is the e-banking” said Prof. Ngowi.

He said, if Mr. taxman is trying to tax the normal business operations while the model being used currently is digital economy, he may not be able to capture the revenues that are being generated through these applications.

Prof. Ngowi advised that, because the government is aiming at increasing its revenue collections, it has to be aware of the changes in technology and the way it is changing in each sector and how such technological changes impacts on the taxation system.

In talking of the fourth industrial revolution, Prof. Ngowi said that the move has a lot of implications on taxes and revenues. He added that, “If we don’t get it correctly, the economy will be growing, digitalized industries will come but the government will not get the expected revenues” said Prof. Ngowi.

He said that, due to technology revolution, Mr. taxman will see people doing things which are not in his tax books, therefore it might be difficult for Mr. taxman to tax those things.

“These technologies have a number of implications when it comes to policies like fiscal policy, laws and regulations, you may find a certain identified taxable area has no laws or regulation that shows how to tax such particular business or activity. A good example of this is the block chain technology ecosystem which has quickly spread across the globe but remains unregulated” said Prof Ngowi.

He concluded by saying that in this new technology era, some transactions have been carried out through the block chain technology, therefore if the country’s tax system is not in a block chain system, the government may not be able to capture it for tax purposes.