Press Release

08th June 2018

FUNDS FLOWING ILLICITLY OUT OF TANZANIA MUST END NOW

At a meeting of Trade Unions, Civil Society Organizations (CSOs), Student and Youth
groups in Tanzania in Dar es Salaam on the 07th – 8th June 2018, under the theme
“Confronting the Injustices”, it was concluded that Tanzania can no longer afford to lose
out on large amounts of tax revenue due to tax avoidance and harmful tax incentives. The
meeting participants agreed on a set of demands to the Tanzanian government – including
reviewing all tax incentives and tax treaties, and ensuring better transparency of corporate
affairs including though public registers on beneficial ownership of companies and trusts.
The meeting also calls on the government to provide more resources to the Tanzanian
Revenue Authority in order for them to collect more taxes to better fund public infrastructure
and public services.

The meeting noted that in recent years corporate tax rates and tax contributions to national
revenue have decreased while the taxes collected from individuals as personal income tax has
increased, both at the global and national levels. Secondly, Tanzania loses significant
amounts of funds due to harmful tax incentives to multinational companies as well as through
illicit financial flows. For instance, it is estimated that the country loses US$ 531.5m
annually to tax incentives. The meeting further observed that some of Tanzania’s tax treaties
provisions limits the country’s ability to tax some multinational within the context of tax laws
enacted in 2004.

The meeting also observed that a lack of public knowledge about the tax affairs of companies
operating in Tanzania especially multinational companies. This problem is made worse by
the challenge of financial secrecy. Whereas the meeting applauds and appreciate the efforts
of Tanzania Revenue Authority in collecting the required taxes, there is need for the
Government to enhance the capacity of TRA in terms of technically support and increased
human resource. This will improve the tax management in the Country.

We believe that the government of Tanzania can collect more revenue by reducing
unnecessary tax incentives to multinational companies. This will help to address the
challenges of funding public infrastructure development and the wages of public sector
workers. We also believe the government’s fight against illicit financial flows will be more
successful with the involvement of all stakeholders, including trade unions and wider civil
society. The meeting therefore recommends the following to the Government of Tanzania:

a) Tax Incentives

1. Considering that Tanzania is losing a lot of money due to tax incentives, there
is a need for the Government to make public the current tax incentives -
including discretionary incentives - on the TRA website. Based on this
information, there should be a review of existing statutory tax incentives
through cost benefit analysis with an aim of eliminating harmful incentives.

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 2. We further call upon the Government to halt further discretionary tax
incentives until an audit is undertaken to assess and justify their benefits to the
economy.

3. All tax incentives should be subject to public scrutiny including by

parliament, trade unions, civil societies, media and public participation.

4. Special Economic Zones: The Government proposed in its last financial

year’s budget to increase the number of special economic zones (SEZs).

5. Review the Special Economic Zones (SEZs) through an independent cost-

benefit analysis and discontinue the SEZs that are not beneficial to Tanzania.

6. Review all existing statutory tax incentives through a cost-benefit analysis,

and remove those that are not beneficial.

7. List all current tax incentives – including discretionary tax incentives – on

the Tanzania Revenue Authority (TRA) website.

8. Subject all tax incentives – including statutory and discretionary incentives

and those in SEZs – to public scrutiny; including the parliament, Trade
Unions, media, civil society and citizens.

9. Do not hand out any further discretionary tax incentives to individual

companies.

b) Tax Treaties

1. Create a public policy framework stating the intended objectives with

Tanzania’s tax treaty networks.
2. Ensure all tax treaties allow Tanzania to tax Capital Gains Tax on all
capital gains of multinationals.
3. Do not negotiate any tax treaties with tax havens such as Mauritius, the
Seychelles or the Netherlands.

c) Tanzania’s international role

1. Tanzania to proactively push for a Global Tax Body rather than the
Organization for Economic Co-operation and Development (OECD) setting
international tax rules.

2. Tanzania to negotiate a regional minimum effective corporate income tax

rate to avoid tax competition.

d) Transparency

1. Tanzania to proactively push for all multinationals operating in Tanzania

having to file a country-by-country report with the TRA.
2. Tanzania should introduce a public register of beneficial ownership covering
all companies and trusts.
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e) Enforcement

1. The TRA must receive additional resourcing – in terms of staff, training

and IT infrastructure. This will bring in much more money than it will cost.
Prepared by
Trade Union Congress of Tanzania (TUCTA) and Public Services
International (PSI) affiliate unions; TALGWU, TUGHE, RAAWU and
TUICO, East African Trade Union Confederation (EATUC) Civil Society
Organizations such as Open Mind Tanzania (OMT), Tanzania Coalition on
Debt and Development (TCDD), Inter University Tax Justice Network Forum
(IUTJNF) and Pan African Center for Policy Studies (PACPS)