SPEECH BY HON.DR. PHILLIP MPANGO, MINISTER FOR FINANCE AND PLANNING DURING THE LAUNCH OF NORWAYS CONTRIBUTION TO THE TAX MODERNISATION PROGRAMME COOPERATION BETWEEN THE ROYAL GOVERNMENT OF THE KINGDOM OF NORWAY AND TANZANIA REVENUE AUTHORITY (TRA) Honourable, Tone Skogen, Deputy Minister of Foreign Affairs, Kingdom of Norway; H.E. Hanne-Mare Kaarstad, Ambassador, Royal Norwegian Embassy to the United Republic of Tanzania; Delegates from the Royal Norwegian Government; Deputy Minister, Ministry of Finance and Planning; Permanent Secretary, Ministry of Finance and Planning; Acting Commissioner General of Tanzania Revenue Authority; Government Officials; Members of the Press; Ladies and Gentlemen; 1
The Government of the Royal Kingdom of Norway through the Ministry of Foreign Affairs and the Government of Tanzania entered into an agreement on 23 rd October, 2012 regarding support to Tanzania Revenue Authority (TRA). Subsequently, TRA and the Norwegian Tax Administration (NTA) signed an agreement on 27 th May, 2013 for Institutional cooperation as stated in the MoU signed between the two administrations on 27 th June 2011 to support compliance strengthening initiatives on Revenue Administration in Tanzania especially in the Large Taxpayers Department. The support programme covered the years 2012-2015 and was officially completed in December 2015. The programme included the financing of our institutional cooperation with the NTA. The main objective of the programme was to increase domestic tax revenue through compliance enhancement of large taxpayers. The expected outcome was; improvement in audit effectiveness, efficiency & quality alongside establishment of the International Taxation Unit (ITU). Generally the objective of the support programme between NTA and TRA was to attain a reduction in the tax gap through improving tax compliance. Specifically, the support was to contribute to further improvements in TRA's 2
enforcement capacity; strengthened taxpayer compliance thereby increasing tax revenue. The achievement of this goal has been promoted through capacity building in different areas and through different means. Allow me to mention a few remarkable successes in terms of performance improvement in the targeted and agreed milestones as per MOU. Under the NTA support, TRA, developed transfer pricing guidelines that were approved in 2014 and are currently operational. In line with this, Practice Notes have been developed on the application of Section 56 of the Tanzania Income Tax Act with respect to taxation of gains attributable to indirect transfer of Tanzanian assets through overseas sale of shares. We acknowledge the hands on support from NTA whereby successful technical workshops were conducted on intragroup services and interest to TRA auditors from revenue departments. Discussions were held on transfer pricing cases including telecommunications, gas and specialized sectors whereby the NTA input into these cases has been very useful. TRA and NTA conducted joint audits in order to clear backlog cases of major mining companies. The results from audits were positive whereby 3
TRA managed to reduce the declared losses as well as converting the declared loss to additional taxes. We thank our colleagues from NTA for their tireless efforts in making this project a success. The Royal Norwegian Government as part of the agreement financed benchmarking visits and training for staff from the Large Taxpayers Department. The trainings have tremendously enhanced capacity to tax auditors, especially in the areas of extractive industry and international taxation. The International Taxation Unit is operational and handles cases in an effective and efficient manner. Auditors now handle complex tax audits with a better understanding and are more efficient than it used to be prior to this assistance. Tanzania has also benefited from the Norwegian Government technical assistance in implementing a three-year project aimed at developing a Modern Fiscal and Regulatory Framework for Extractive Industry in Tanzania. The three year project that started in FY 2012/13 was implemented through a number of Government Ministries and Institutions, from whom a permanent national modeling project team for mining, oil and gas was drawn. The institutions included TRA (secretariat), Ministry of 4
Finance (MoF), Ministry of Energy and Minerals (MEM), Tanzania Minerals Audit Agency (TMAA), Tanzania Extractive Industries Transparency Initiative (TEITI), President s Office Planning Commission (POPC), Tanzania Petroleum Development Corporation (TPDC), Bank of Tanzania (BoT), National Development Corporation (NDC) and the National Bureau of Statistics (NBS). The team has undergone capacity building trainings on Revenue forecasting models for Mining and for Oil and gas and is now able to use the models to simulate revenue forecasts for both hard-rock mines & oil and gas fields with feasible proven reserves. Honorable Minister, Let me take this opportunity to say thank you to the Royal Norwegian Government for agreeing to support TRA for years beyond 2015 through the Basket Funding arrangement by contributing a total of Norwegian Kroner 48 million to finance Tax Modernization Program of TRA s Fourth Corporate Plan. It is expected that our cooperation will boost TRA s ability to achieve its vision of increasing domestic revenue contribution through enhancement of voluntary tax compliance. Honorable Minister, 5
Once again on behalf of the Government of Tanzania, I thank Government of the Royal Kingdom of Norway Government for the assistance provided I look forward to a continued cooperation in the future. It is our expectation that the future of Tanzania is to be free of aid through enhanced domestic resource mobilization thank you for being part of that journey. ASANTE SANA THANK YOU VERY MUCH 6