Dar devises new strategy to tap revenue from petty traders

The Tanzanian government has come up with a new strategy to intensify revenue collection from petty traders in the country trading in recognized physical locations, with the first pilot project targeted from various recognized trading locations in Dar es Salaam region, The Business Wiz (TBW) has learnt.

The tax man recently issued directives to senior officials representing five Municipal Councils in the region namely, Ilala, Kinondoni, Temeke, Ubungo and Kigamboni to work out the modalities to assess traders doing business in their respective areas.

The motive behind is to come up with data for  petty traders with an investment capital which exceeds 4m/- ( over $1,593) who should be registered according to the law and given the Taxpayer’s Identification Numbers (TINs).

The process which started earlier this year has found out that, about 9,000 petty traders have successfully been registered so far basing on the criteria needed and that are legible to pay tax out of the estimated 200,000 petty traders operating within Dar es Salaam region alone.

The already registered petty traders have been included in the government’s electronic taxation framework systems and that each one of them has started to pay an annual estimated amount of 100,000/- ( about $39.8) to be paid on quarterly basis  during the 2023/24 Financial Year.

The government targeting to to collect 900m/- (US$ 358,493) by issuing valid receipts from Dar es Salaam region as the campaign strategy aimed at assessing unregistered traders is going on in upcountry regions.

According to the National Sensor Report issued in July 2022, Tanzania has an estimated 25 million petty traders with 75,000 having an investment business capital which exceeds the amount recommended by the government, and therefore are legible to pay income tax.

The Tanzania Revenue Authority (TRA) Director of Tax Payer’s Education Richard Kayombo told TBW that, “the government has worked out modalities with a view to expand tax regime in the country with effect from this year’s Financial Year.

He told TBW in a telephone exclusive that, “this is among new tax measures contained in Finance Act 2023 which effectively starts in July this year”.

He further elaborated that, his department is working in collaboration with the directors of municipal councils to educate the general public especially the small traders on what is going on the ground about the new structure introduced for government’s revenue collection.

“The government has decided to come up with this strategy because it has discovered that there are certain traders who meet the criteria to pay taxes, although the majority have been cheating while trading within their designated locations,” Kayombo said.

He added that scores of traders around the market complex are pocketing thousands of shillings from their sales without paying taxes.

This move is contrary  to strategy taken during the fifth phase government whereby all small traders were issued with identification cards countrywide were forced to pay the annual constant fee of 20,000/- (US$ 8.5) as their contribution to the government coffer.

Elaborating more, Kayombo said issuing of identification cards is now out of bound as the ongoing exercise is merely targeting those with the recommended capital trading in recognized physical locations designed by the municipal concerned.

“The exercise will not involve those who are displaying their products along the streets, but for those who are doing so would be charged with normal levies charged by municipals as stipulated within their by-laws,” he added.

The Federation of Tanzania Small Traders has however applauded the new move adding that, “it would recognize their presence including registering them”.

When contacted for comments, the Deputy Chairperson of the registered union, Steven Lusinde in a telephone interview said, “There should be a formal joint engagement between the two parties that would enable all small traders pay the needed tax”