Respicius Mwijage
Member
- Dec 18, 2023
- 73
- 20
Introduction
Since 2000, Tanzania has undertaken significant reforms to strengthen its governance and public administration frameworks. The tax sector was no exception. The enactment of the Tax Revenue Appeals Act (Cap. 408) led to the establishment of a Unified Tax Revenue Appeals Tribunal (TRAT), with the Court of Appeal (CoA) having final jurisdiction on matters of law. These institutions were created to improve tax justice and align
Tanzania’s tax administration with international standards.
However, despite early progress, the system has suffered notable setbacks over the last two decades. Today, two key elements, the time limit for objection determination and the operationalization of mediation in tax disputes, pose fundamental questions about the integrity and fairness of the system.
This article critically examines the evolution and current state of tax dispute resolution in Tanzania with a specific focus in two key areas: the statutory time limits for determination of objections by the Tanzania Revenue Authority (TRA), and the effectiveness (or lack thereof) of mediation as an alternative dispute resolution mechanism. It assesses legislative reforms since 2000 and offers comparative insights from other jurisdictions, while proposing actionable reforms to restore taxpayer trust and improve administrative justice.
Originally, under Section 13(3) of the Tax Revenue Appeals Act, taxpayers were afforded
Commissioner General (CG) of the Tanzania Revenue Authority (TRA). The law provided a strong legal safeguard intended to promote timely decision-making by the that:
“Where a notice of objection has been given and the Commissioner-General
period of six months, he shall be deemed to have agreed to amend the has not communicated with the person objecting to theassessment within a assessment in accordance with the objection.”
This provision was crucial in establishing administrative accountability. It imposed a
mandatory six-month period withinwhich the CG was required to act on an objection, taxpayer. The effect was twofold; it protected taxpayers from prolonged uncertainty and failing which the objection would automatically be considered accepted in favour of the compelled the tax administration to address disputes promptly.
However, this legal protection was repealed through the Finance Act No. 15 of 2004. With time limits, numerous objections remained unresolved for years. Worse still, in several largely open-ended and subject to the discretion of the CG. In this vacuum of enforceable
instances, the TRA proceeded to issue agency notices to freeze or recover taxpayer funds the deletion of this provision, the law ceased to impose any strict timeframe for objection determination. From 2004 to 2020 a span of sixteen yearsthe objection process became even while those very objections were still pending.
This legal regression significantly weakened taxpayer protections and underscored the need to reintroduce clear timelines in objection handling to ensure fairness, certainty, and trust in the tax dispute resolution system.
Reintroduction of the Six-Month Limit
The Finance Act No. 8 of 2020 marked a significant shift in Tanzania’s tax dispute efficiency and accountability within the tax administration, the implementation of the which impose a six-month deadline on the Commissioner General (CG) to determine tax objections. While the intention behind this legislative change may have been to promote amended the Tax Administration Act (Cap. 438) to include subsections 52(10) and (11), framework by introducing time-bound measures for handling objections. Specifically, it
reform reveals inherent flaws that ultimately disadvantage the taxpayer.
According to the amended law, if the CG fails to issue a decision within six months, the tax assessment or decision in question is not deemed accepted or resolved in favor of the taxpayer. Instead, the law states: “… the tax assessment or tax decision shall be treated
as confirmed and the objector shall have the right to appeal to the Board…”
This means that the taxpayer must now escalate the matter to the Tax Revenue Appeals Board (TRAB) simply because the TRA did not act within the prescribed timeframe.
This provision effectively shifts the burden of administrative inefficiency onto the penalizes the taxpayer by confirming the disputed assessment. In practice, this compels the taxpayer to incur additional costs, time, and legal burdens to seek redress through taxpayer. Instead of holding the tax authority accountable for procedural delays, the law
penalizes the taxpayer by confirming the disputed assessment. In practice, this compels the taxpayer to incur additional costs, time, and legal burdens to seek redress through
TRAB despite having already engaged in good faith with the TRA’s objection process.
Therefore, while the reintroduction of the six-month limit ostensibly aims to improve responsiveness within the tax administration, it inadvertently creates a legal bottleneck. Rather than resolving disputes fairly and efficiently, the provision appears to prioritize procedural formality over substantive justice, undermining the very purpose of tax objection mechanisms.
Regional Comparisons
In contrast to Tanzania’s current approach, several regional countries maintain more progressive and taxpayer-friendly systems for resolving tax objections. For instance, in Rwanda, the law mandates that objections must be resolved within a specific and and encourages the tax authority to act promptly, thereby upholding the principle of
reasonable timeframeprecisely, within 60 days. This requirement ensures accountability
administrative justice.
Similarly, Ugandaand Zambia still adhere to the earlier and more favorable Tanzanian legal position; where the Commissioner General fails to determine a taxpayer’s objection offers certainty to taxpayers and holds the tax authority accountable for timely decision within the prescribed statutory time, the objection is deemed accepted. This position making, promoting fairness and trust in the tax system.
Tanzania, however, has reversed this position. By removing the provision that treated the fair, and transparent handling of disputes. As a result, taxpayers are now left in uncertainty, often forced to wait indefinitely for decisions, which disrupts business fundamentally undermines the principle of administrative justice, which demands timely, Tanzania has taken a step backward. This reversal is not merely a procedural change; it fundamentally undermines the principle of administrative justice, which demands timely, fair, and transparent handling of disputes. As a result, taxpayers are now left in uncertainty, often forced to wait indefinitely for decisions, which disrupts business planning and increases the cost of compliance.
The Unfulfilled Promise of Mediation in Tax Disputes
The idea of resolving tax disputes through mediation, conciliation, or arbitration was captured under Section 17(1)(b) of the Tax Revenue Appeals Act (Cap. 408) and further clearly embedded in Tanzania’s tax legal framework, reflecting a legislative intent to embrace alternative dispute resolution (ADR) mechanisms. Specifically, this intention was reinforced by Rule 15(10) of the Tax Revenue Appeals Board Rules of 2001.
Section 17(1)(b) of the Tax Revenue Appeals Act expressly granted the Tax Revenue
Appeals Board (TRAB) and the Tax Revenue Appeals Tribunal (TRAT)the authority “to
resolve any complaint or appeal by mediation, conciliation or arbitration.”
This provision signified a progressive step in aligning Tanzania’s tax dispute resolution used to promote faster, less adversarial, and more cost-effective outcomes for both mechanisms with modern international practices, where ADR methods are increasingly taxpayers and tax administrations.
To complement this, Rule 15(10) of the Tax Revenue Appeals Board Rules of 2001 attempted to operationalize this vision by stating that:
“In hearing the appeal, the Board may determine the matter through mediation, conciliation or arbitration, but the rules of procedure under the Civil Procedure Code 1966
and the Arbitration Ordinance with regard to the conduct of mediation and arbitration shall not apply in relation to the Proceedings under these Rules.”
Despite this clear legislative framework, the practical implementation of these ADR institutional arrangements were ever established to guide how mediation or arbitration should be conducted under TRAB or TRAT. This omission effectively rendered the mechanisms has remained largely aspirational. Noformal procedures, frameworks, or
statutory powers under Section 17(1)(b) dormant.
In practice, while there have been occasional settlements between taxpayers and the tax meaningful way, leaving mediation as a theoretical possibility rather than a functioning themselves. Such settlements rarely benefitted from structured mediation processes, nor authority, these have occurred in an ad hoc manner, often initiated by taxpayers (TRA), for its part, has not institutionalized or supported these mechanisms in any were they facilitated by neutral mediators or conciliators. The Tanzania Revenue Authority (TRA), for its part, has not institutionalized or supported these mechanisms in any meaningful way, leaving mediation as a theoretical possibility rather than a functioning option in the tax dispute resolution system.
This unfulfilled promise points to a significant gap between legislative intent and administrative practice. While the legal provisions remain in place, the absence of effective, non-contentious path to resolving disputes, a missed opportunity that continues supporting rules and procedures has denied taxpayers and the revenue authority an to undermine the efficiency and fairness of the tax appeals process inourcountry.
Amicable Settlement
The idea of resolving tax disputes through amicable settlement was first introduced in (8), (9), and (10). These provisions created a formal timeline within which parties could was later expanded by the Finance Act No. 6of 2024 through the addition of subsections
parties sixty (60) days to reach an amicable settlement, with a possible ten (10) day extension upon application. Should they fail to reach a settlement within this time, the (TRAB) or the Tax Revenue Appeals Tribunal (TRAT). Specifically, the law grants the
Section 22(7) and (8) of the Tax Revenue Appeals Act, by FinanceAct No.3 of 2021 and resolve their disputes amicably before a final judgment by the Tax Revenue Appeals Board appeal is required to proceed to full hearing.
Despite this statutory framework, the mechanism has not been effectively implemented largely initiated by taxpayers themselves, often without adequate support or involvement in practice. One of the main shortcomings has been the absence of detailed procedural
Regulations, 2016. While a few amicable settlements have occurred, these were rare and
guidelines under either the TRAB and TRAT Rules or the Tax Administration (General)
from the Tanzania Revenue Authority (TRA).
As the law currently stands, Section 22 of the Tax Revenue Appeals Act was amended to
include provisions for amicable settlements as follows:
“(7) A party to an appeal may, at any stage of the proceedings before the judgement is delivered by the Board or Tribunal as the case may be, apply for the appeal to be settled amicably through mediation.
(8) For purposes of subsection (7), the Board or Tribunal shall-
(a) require the parties to report the outcome of the mediation within a specified time and the Board or Tribunal shall issue a final order with respect to such mediation;
(b) issue the final order upon submissionof a written settlement agreement duly signed by both parties; and
(c) not entertain an issue which has been settled amicably by parties under this section.”
However, the enactment of these provisions has not been accompanied by procedural
settlementto occur, with no guarantee of a structured or institutional process to support
remain in a position where they must essentially petition or request for such amicable
rules necessary to guide the conduct of such amicable settlement. As a result, taxpayers
remain in a position where they must essentially petition or request for such amicable settlement to occur, with no guarantee of a structured or institutional process to support it.
The amendment sets the stage for further developments, as envisioned under Section
22(8), (9), and (10), which were introduced through the Finance Act No. 6 of 2024. These additions provide greater clarity regarding thetimelines for such settlements.
“(8) The appeal shall be settled amicably within sixty days from the date the Board or Tribunal issued an order under subsection (7) allowing the appeal to be settled amicably.
(10) Where the appeal is not amicably settled within the time prescribed under this section, the settlement of the appeal shall betreated as failed and the Board
or Tribunal shall proceed to determine the appeal in accordance with section 18.”
These additions were an effort to reinforce the framework for amicable settlement. Nonetheless, the absence of a detailed procedural mechanism under the TRAB or TRAT rules still leaves a significant gap in implementation. The law assumes that taxpayers and the TRA can sit down and resolve disputes even after a protracted audit and objection
process without the aid of a neutral third party or mediator.
This raises serious concerns. Tax disputes are inherently adversarial, often marked by
practice, such a process is unlikely to yield fair and balanced outcomes, especially when
deep mistrust and conflicting interpretations of law and facts. Expecting parties to engage
in meaningful dialogue and resolution without a neutral mediator is unrealistic. In practice, such a process is unlikely to yield fair and balanced outcomes, especially when there is an imbalance of power or expertise between the parties.
While the legislative initiative to enable amicable settlement is commendable and inline
backing. Until formal mediation protocols and institutional support structures are mechanism as a mere formality or hopeful plea rather than a viable and reliable dispute with international best practices, its practical utility remains limited without institutional developed under the TRAB and TRAT rules, taxpayers will continue to approach this resolution avenue.
Legal Ambiguities and Implementation Gaps
The current legal framework governing tax dispute resolution in Tanzania reveals a level
notable ambiguity arises from the apparent inconsistency between Section 22 of the Tax of incoherence, particularly when examining the provisions related to mediation. One notable ambiguity arises from the apparent inconsistency between Section 22 of the Tax Revenue Appeals Act (TRAA) and Section 17(1)(b) of the same Act, as well as Rule 16(11) ofthe Tax Revenue Appeals Board (TRAB) Rules, 2018.
According to the current Section 22 of the TRAA, the legal approach has shifted from "mediation." Similarly, Rule 16(11) of the TRAB Rules, 2018 retains "mediation" to "amicable settlement." This change suggests a legislative intent to adopt a broader or differently frameddispute resolution mechanism. However, despite this change, Section 17(1)(b) of the Act continues to explicitly empower the Board with
authority to conduct "mediation." Similarly, Rule 16(11) of the TRAB Rules, 2018 retains clear references to mediation as a formal process within the appeals procedure.
This lack of harmonization in terminology and purpose creates uncertainty in implementation. The legislation does not provide guidance on how to reconcile the use of "mediation" under one provision with "amicable settlement" under another. Moreover, beyond the terminological inconsistency, there is a notable absence of practical and institutional arrangements for conducting mediation. There are no clear procedures for accrediting mediators, establishing timelines for mediation processes, or ensuring enforceability of mediated agreements. As a result, even where the law refers to mediation or amicable settlement, the lack of operational frameworks hinders its effective application. This legal ambiguity undermines the credibility and functionality of alternative dispute resolution mechanisms withinTanzania’s tax appeals system.
The Way Forward
In advanced jurisdictions, mediation is typically introduced immediately following the mediation provisions found in the Civil Procedure Code (Cap. 33), which governs determination of a tax objection. This process is guided by neutral facilitators such as chairperson or vice-chairperson of tribunal or accredited mediators who assist both an approach, it is essential to introduce clear procedural rules comparable to the mediation provisions found in the Civil Procedure Code (Cap. 33), which governs mediation in civil litigation.
From the historical background illustrated above, it is evident that mediation currently lacks any formal place within Tanzania’s tax dispute resolution framework. More critically, the concept of amicable settlement lacks an established procedure that would enable a taxpayer to initiate or engage in such a process meaningfully.
In progressive tax jurisdictions, mediation is institutionalized to occur immediately after place, much like the Civil Procedure Code (Cap. 33) provides for civil disputes in the Ministry of Justice and Constitutional Affairs could be instrumental in facilitating constructive engagement between the taxpayer and the revenue authority prior to the Tax Revenue Appeals Board (TRAB), or a certified mediator registered under the adjudication. For this model to function effectively, a well-defined set of rules must be in the objection stage. A neutral mediatorsuch as the Chairperson or Vice Chairperson of District Courts and the High Court when addressing mediation issues.
Moreover, the statutory six-month timeframe for the Commissioner General to determine objections must be enforced without exception. In the event that the Commissioner General fails to issue a determination within six months, the underlying tax assessment or decision should be deemed resolved in favour of the taxpayer. This approach aligns with the original framework under the Tax Revenue Appeals Act of 2000 and upholds the principles of good governance in tax dispute resolution.
A Time for Reflection and Reform
A sober and rational evaluation of the current legal framework reveals fundamental prioritized through the recent changes in tax laws. Furthermore, it is legitimate to inquire whether the current system is fostering conditions that permit unethical practices or
questions that demand urgent attention. One must ask whether the framework promotes objectivity in tax administration. It is also necessary to question whose interests are being prioritized through the recent changes in tax laws. Furthermore, it is legitimate to inquire whether the current system is fostering conditions that permit unethical practices or compromise between tax officials and taxpayers.
There is a compelling need to act. Without reforms, the current legal structure risks undermining taxpayer confidence and could negatively affect domestic revenue rather, it must be mainstreamed as an integral and structured component of Tanzania’s collection. Mediation should no longer be treated as a peripheral or optional mechanism; tax dispute resolution regime.
The prevailing adversarial system where in one party wins at the complete expense of the
the Tanzania Revenue Authority (TRA) has a fundamental role to play in this reform shillings and affect both public finance and private capital. The Commissioner General of the Tanzania Revenue Authority (TRA) has a fundamental role to play in this reform agenda. Adhering to principles of good governance in tax administration would, in turn, promote voluntary tax compliance and increase revenue collection.
It is therefore imperative to establish clear and formal guidelines for tax dispute level or before the Tax Revenue Appeals Board, the Tax Revenue Appeals Tribunal, or left solely in the hands of TRA, which is a party in all disputes, whether at the objection
resolution. Importantly, the design and enforcement of such procedures should not be the Court of Appeal.
In reviewing the current legal framework, several crucial issues emerge. There is a need to assess whether the system fosters administrative accountability and respects the rights of taxpayers. We must question whether the elimination of the original objection time limit truly serves the public interest or merely opens the door to abuse of process. Finally, we must confront whether the continued absence of formal mediation is contributing to inefficiency or even facilitating corruption within the tax system.
Given these observations, several reforms are urgently required. First, the six-month rule must be formalized through regulations under TRAB and TRAT. Third, the law should be acceptance of the taxpayer’s objectionmust be restored. Second, mediation procedures must be formalized through regulations under TRAB and TRAT. Third, the law should be
ensure neutrality and fairness, the system must empower independent mediators and be
clarified to harmonize all references to mediation and amicable settlement. And lastly, to ensure neutrality and fairness, the system must empower independent mediators and be governed by transparent and predictable rules.
A Call to Action
The trajectory of tax dispute resolution in Tanzania reveals a story of early promise margins to the mainstream. Time limits must be enforced in favour of justicenot
remedies. Reforms must be swift and bold. The TRA, TRAB, TRAT, the judiciary, compliance by making tax justice visible and accessible. Mediation must move from the
followed by administrative and legislative backsliding. We have moved from a taxpayer protective system to one that increasingly burdens the taxpayer and limits accessible administration, enhance legal certainty and procedural fairness, and promote voluntary compliance by making tax justice visible and accessible. Mediation must move from the
margins to the mainstream. Time limits must be enforced in favour of justice not bureaucracy. Above all, dispute resolution must serve the interests of the nation, not just
the institution.
Let us not wait for another decade of legislative indecision. The time to act is now.
“Together we build our nation”
Since 2000, Tanzania has undertaken significant reforms to strengthen its governance and public administration frameworks. The tax sector was no exception. The enactment of the Tax Revenue Appeals Act (Cap. 408) led to the establishment of a Unified Tax Revenue Appeals Tribunal (TRAT), with the Court of Appeal (CoA) having final jurisdiction on matters of law. These institutions were created to improve tax justice and align
Tanzania’s tax administration with international standards.
However, despite early progress, the system has suffered notable setbacks over the last two decades. Today, two key elements, the time limit for objection determination and the operationalization of mediation in tax disputes, pose fundamental questions about the integrity and fairness of the system.
This article critically examines the evolution and current state of tax dispute resolution in Tanzania with a specific focus in two key areas: the statutory time limits for determination of objections by the Tanzania Revenue Authority (TRA), and the effectiveness (or lack thereof) of mediation as an alternative dispute resolution mechanism. It assesses legislative reforms since 2000 and offers comparative insights from other jurisdictions, while proposing actionable reforms to restore taxpayer trust and improve administrative justice.
Originally, under Section 13(3) of the Tax Revenue Appeals Act, taxpayers were afforded
Commissioner General (CG) of the Tanzania Revenue Authority (TRA). The law provided a strong legal safeguard intended to promote timely decision-making by the that:
“Where a notice of objection has been given and the Commissioner-General
period of six months, he shall be deemed to have agreed to amend the has not communicated with the person objecting to theassessment within a assessment in accordance with the objection.”
This provision was crucial in establishing administrative accountability. It imposed a
mandatory six-month period withinwhich the CG was required to act on an objection, taxpayer. The effect was twofold; it protected taxpayers from prolonged uncertainty and failing which the objection would automatically be considered accepted in favour of the compelled the tax administration to address disputes promptly.
However, this legal protection was repealed through the Finance Act No. 15 of 2004. With time limits, numerous objections remained unresolved for years. Worse still, in several largely open-ended and subject to the discretion of the CG. In this vacuum of enforceable
instances, the TRA proceeded to issue agency notices to freeze or recover taxpayer funds the deletion of this provision, the law ceased to impose any strict timeframe for objection determination. From 2004 to 2020 a span of sixteen yearsthe objection process became even while those very objections were still pending.
This legal regression significantly weakened taxpayer protections and underscored the need to reintroduce clear timelines in objection handling to ensure fairness, certainty, and trust in the tax dispute resolution system.
Reintroduction of the Six-Month Limit
The Finance Act No. 8 of 2020 marked a significant shift in Tanzania’s tax dispute efficiency and accountability within the tax administration, the implementation of the which impose a six-month deadline on the Commissioner General (CG) to determine tax objections. While the intention behind this legislative change may have been to promote amended the Tax Administration Act (Cap. 438) to include subsections 52(10) and (11), framework by introducing time-bound measures for handling objections. Specifically, it
reform reveals inherent flaws that ultimately disadvantage the taxpayer.
According to the amended law, if the CG fails to issue a decision within six months, the tax assessment or decision in question is not deemed accepted or resolved in favor of the taxpayer. Instead, the law states: “… the tax assessment or tax decision shall be treated
as confirmed and the objector shall have the right to appeal to the Board…”
This means that the taxpayer must now escalate the matter to the Tax Revenue Appeals Board (TRAB) simply because the TRA did not act within the prescribed timeframe.
This provision effectively shifts the burden of administrative inefficiency onto the penalizes the taxpayer by confirming the disputed assessment. In practice, this compels the taxpayer to incur additional costs, time, and legal burdens to seek redress through taxpayer. Instead of holding the tax authority accountable for procedural delays, the law
penalizes the taxpayer by confirming the disputed assessment. In practice, this compels the taxpayer to incur additional costs, time, and legal burdens to seek redress through
TRAB despite having already engaged in good faith with the TRA’s objection process.
Therefore, while the reintroduction of the six-month limit ostensibly aims to improve responsiveness within the tax administration, it inadvertently creates a legal bottleneck. Rather than resolving disputes fairly and efficiently, the provision appears to prioritize procedural formality over substantive justice, undermining the very purpose of tax objection mechanisms.
Regional Comparisons
In contrast to Tanzania’s current approach, several regional countries maintain more progressive and taxpayer-friendly systems for resolving tax objections. For instance, in Rwanda, the law mandates that objections must be resolved within a specific and and encourages the tax authority to act promptly, thereby upholding the principle of
reasonable timeframeprecisely, within 60 days. This requirement ensures accountability
administrative justice.
Similarly, Ugandaand Zambia still adhere to the earlier and more favorable Tanzanian legal position; where the Commissioner General fails to determine a taxpayer’s objection offers certainty to taxpayers and holds the tax authority accountable for timely decision within the prescribed statutory time, the objection is deemed accepted. This position making, promoting fairness and trust in the tax system.
Tanzania, however, has reversed this position. By removing the provision that treated the fair, and transparent handling of disputes. As a result, taxpayers are now left in uncertainty, often forced to wait indefinitely for decisions, which disrupts business fundamentally undermines the principle of administrative justice, which demands timely, Tanzania has taken a step backward. This reversal is not merely a procedural change; it fundamentally undermines the principle of administrative justice, which demands timely, fair, and transparent handling of disputes. As a result, taxpayers are now left in uncertainty, often forced to wait indefinitely for decisions, which disrupts business planning and increases the cost of compliance.
The Unfulfilled Promise of Mediation in Tax Disputes
The idea of resolving tax disputes through mediation, conciliation, or arbitration was captured under Section 17(1)(b) of the Tax Revenue Appeals Act (Cap. 408) and further clearly embedded in Tanzania’s tax legal framework, reflecting a legislative intent to embrace alternative dispute resolution (ADR) mechanisms. Specifically, this intention was reinforced by Rule 15(10) of the Tax Revenue Appeals Board Rules of 2001.
Section 17(1)(b) of the Tax Revenue Appeals Act expressly granted the Tax Revenue
Appeals Board (TRAB) and the Tax Revenue Appeals Tribunal (TRAT)the authority “to
resolve any complaint or appeal by mediation, conciliation or arbitration.”
This provision signified a progressive step in aligning Tanzania’s tax dispute resolution used to promote faster, less adversarial, and more cost-effective outcomes for both mechanisms with modern international practices, where ADR methods are increasingly taxpayers and tax administrations.
To complement this, Rule 15(10) of the Tax Revenue Appeals Board Rules of 2001 attempted to operationalize this vision by stating that:
“In hearing the appeal, the Board may determine the matter through mediation, conciliation or arbitration, but the rules of procedure under the Civil Procedure Code 1966
and the Arbitration Ordinance with regard to the conduct of mediation and arbitration shall not apply in relation to the Proceedings under these Rules.”
Despite this clear legislative framework, the practical implementation of these ADR institutional arrangements were ever established to guide how mediation or arbitration should be conducted under TRAB or TRAT. This omission effectively rendered the mechanisms has remained largely aspirational. Noformal procedures, frameworks, or
statutory powers under Section 17(1)(b) dormant.
In practice, while there have been occasional settlements between taxpayers and the tax meaningful way, leaving mediation as a theoretical possibility rather than a functioning themselves. Such settlements rarely benefitted from structured mediation processes, nor authority, these have occurred in an ad hoc manner, often initiated by taxpayers (TRA), for its part, has not institutionalized or supported these mechanisms in any were they facilitated by neutral mediators or conciliators. The Tanzania Revenue Authority (TRA), for its part, has not institutionalized or supported these mechanisms in any meaningful way, leaving mediation as a theoretical possibility rather than a functioning option in the tax dispute resolution system.
This unfulfilled promise points to a significant gap between legislative intent and administrative practice. While the legal provisions remain in place, the absence of effective, non-contentious path to resolving disputes, a missed opportunity that continues supporting rules and procedures has denied taxpayers and the revenue authority an to undermine the efficiency and fairness of the tax appeals process inourcountry.
Amicable Settlement
The idea of resolving tax disputes through amicable settlement was first introduced in (8), (9), and (10). These provisions created a formal timeline within which parties could was later expanded by the Finance Act No. 6of 2024 through the addition of subsections
parties sixty (60) days to reach an amicable settlement, with a possible ten (10) day extension upon application. Should they fail to reach a settlement within this time, the (TRAB) or the Tax Revenue Appeals Tribunal (TRAT). Specifically, the law grants the
Section 22(7) and (8) of the Tax Revenue Appeals Act, by FinanceAct No.3 of 2021 and resolve their disputes amicably before a final judgment by the Tax Revenue Appeals Board appeal is required to proceed to full hearing.
Despite this statutory framework, the mechanism has not been effectively implemented largely initiated by taxpayers themselves, often without adequate support or involvement in practice. One of the main shortcomings has been the absence of detailed procedural
Regulations, 2016. While a few amicable settlements have occurred, these were rare and
guidelines under either the TRAB and TRAT Rules or the Tax Administration (General)
from the Tanzania Revenue Authority (TRA).
As the law currently stands, Section 22 of the Tax Revenue Appeals Act was amended to
include provisions for amicable settlements as follows:
“(7) A party to an appeal may, at any stage of the proceedings before the judgement is delivered by the Board or Tribunal as the case may be, apply for the appeal to be settled amicably through mediation.
(8) For purposes of subsection (7), the Board or Tribunal shall-
(a) require the parties to report the outcome of the mediation within a specified time and the Board or Tribunal shall issue a final order with respect to such mediation;
(b) issue the final order upon submissionof a written settlement agreement duly signed by both parties; and
(c) not entertain an issue which has been settled amicably by parties under this section.”
However, the enactment of these provisions has not been accompanied by procedural
settlementto occur, with no guarantee of a structured or institutional process to support
remain in a position where they must essentially petition or request for such amicable
rules necessary to guide the conduct of such amicable settlement. As a result, taxpayers
remain in a position where they must essentially petition or request for such amicable settlement to occur, with no guarantee of a structured or institutional process to support it.
The amendment sets the stage for further developments, as envisioned under Section
22(8), (9), and (10), which were introduced through the Finance Act No. 6 of 2024. These additions provide greater clarity regarding thetimelines for such settlements.
“(8) The appeal shall be settled amicably within sixty days from the date the Board or Tribunal issued an order under subsection (7) allowing the appeal to be settled amicably.
(10) Where the appeal is not amicably settled within the time prescribed under this section, the settlement of the appeal shall betreated as failed and the Board
or Tribunal shall proceed to determine the appeal in accordance with section 18.”
These additions were an effort to reinforce the framework for amicable settlement. Nonetheless, the absence of a detailed procedural mechanism under the TRAB or TRAT rules still leaves a significant gap in implementation. The law assumes that taxpayers and the TRA can sit down and resolve disputes even after a protracted audit and objection
process without the aid of a neutral third party or mediator.
This raises serious concerns. Tax disputes are inherently adversarial, often marked by
practice, such a process is unlikely to yield fair and balanced outcomes, especially when
deep mistrust and conflicting interpretations of law and facts. Expecting parties to engage
in meaningful dialogue and resolution without a neutral mediator is unrealistic. In practice, such a process is unlikely to yield fair and balanced outcomes, especially when there is an imbalance of power or expertise between the parties.
While the legislative initiative to enable amicable settlement is commendable and inline
backing. Until formal mediation protocols and institutional support structures are mechanism as a mere formality or hopeful plea rather than a viable and reliable dispute with international best practices, its practical utility remains limited without institutional developed under the TRAB and TRAT rules, taxpayers will continue to approach this resolution avenue.
Legal Ambiguities and Implementation Gaps
The current legal framework governing tax dispute resolution in Tanzania reveals a level
notable ambiguity arises from the apparent inconsistency between Section 22 of the Tax of incoherence, particularly when examining the provisions related to mediation. One notable ambiguity arises from the apparent inconsistency between Section 22 of the Tax Revenue Appeals Act (TRAA) and Section 17(1)(b) of the same Act, as well as Rule 16(11) ofthe Tax Revenue Appeals Board (TRAB) Rules, 2018.
According to the current Section 22 of the TRAA, the legal approach has shifted from "mediation." Similarly, Rule 16(11) of the TRAB Rules, 2018 retains "mediation" to "amicable settlement." This change suggests a legislative intent to adopt a broader or differently frameddispute resolution mechanism. However, despite this change, Section 17(1)(b) of the Act continues to explicitly empower the Board with
authority to conduct "mediation." Similarly, Rule 16(11) of the TRAB Rules, 2018 retains clear references to mediation as a formal process within the appeals procedure.
This lack of harmonization in terminology and purpose creates uncertainty in implementation. The legislation does not provide guidance on how to reconcile the use of "mediation" under one provision with "amicable settlement" under another. Moreover, beyond the terminological inconsistency, there is a notable absence of practical and institutional arrangements for conducting mediation. There are no clear procedures for accrediting mediators, establishing timelines for mediation processes, or ensuring enforceability of mediated agreements. As a result, even where the law refers to mediation or amicable settlement, the lack of operational frameworks hinders its effective application. This legal ambiguity undermines the credibility and functionality of alternative dispute resolution mechanisms withinTanzania’s tax appeals system.
The Way Forward
In advanced jurisdictions, mediation is typically introduced immediately following the mediation provisions found in the Civil Procedure Code (Cap. 33), which governs determination of a tax objection. This process is guided by neutral facilitators such as chairperson or vice-chairperson of tribunal or accredited mediators who assist both an approach, it is essential to introduce clear procedural rules comparable to the mediation provisions found in the Civil Procedure Code (Cap. 33), which governs mediation in civil litigation.
From the historical background illustrated above, it is evident that mediation currently lacks any formal place within Tanzania’s tax dispute resolution framework. More critically, the concept of amicable settlement lacks an established procedure that would enable a taxpayer to initiate or engage in such a process meaningfully.
In progressive tax jurisdictions, mediation is institutionalized to occur immediately after place, much like the Civil Procedure Code (Cap. 33) provides for civil disputes in the Ministry of Justice and Constitutional Affairs could be instrumental in facilitating constructive engagement between the taxpayer and the revenue authority prior to the Tax Revenue Appeals Board (TRAB), or a certified mediator registered under the adjudication. For this model to function effectively, a well-defined set of rules must be in the objection stage. A neutral mediatorsuch as the Chairperson or Vice Chairperson of District Courts and the High Court when addressing mediation issues.
Moreover, the statutory six-month timeframe for the Commissioner General to determine objections must be enforced without exception. In the event that the Commissioner General fails to issue a determination within six months, the underlying tax assessment or decision should be deemed resolved in favour of the taxpayer. This approach aligns with the original framework under the Tax Revenue Appeals Act of 2000 and upholds the principles of good governance in tax dispute resolution.
A Time for Reflection and Reform
A sober and rational evaluation of the current legal framework reveals fundamental prioritized through the recent changes in tax laws. Furthermore, it is legitimate to inquire whether the current system is fostering conditions that permit unethical practices or
questions that demand urgent attention. One must ask whether the framework promotes objectivity in tax administration. It is also necessary to question whose interests are being prioritized through the recent changes in tax laws. Furthermore, it is legitimate to inquire whether the current system is fostering conditions that permit unethical practices or compromise between tax officials and taxpayers.
There is a compelling need to act. Without reforms, the current legal structure risks undermining taxpayer confidence and could negatively affect domestic revenue rather, it must be mainstreamed as an integral and structured component of Tanzania’s collection. Mediation should no longer be treated as a peripheral or optional mechanism; tax dispute resolution regime.
The prevailing adversarial system where in one party wins at the complete expense of the
the Tanzania Revenue Authority (TRA) has a fundamental role to play in this reform shillings and affect both public finance and private capital. The Commissioner General of the Tanzania Revenue Authority (TRA) has a fundamental role to play in this reform agenda. Adhering to principles of good governance in tax administration would, in turn, promote voluntary tax compliance and increase revenue collection.
It is therefore imperative to establish clear and formal guidelines for tax dispute level or before the Tax Revenue Appeals Board, the Tax Revenue Appeals Tribunal, or left solely in the hands of TRA, which is a party in all disputes, whether at the objection
resolution. Importantly, the design and enforcement of such procedures should not be the Court of Appeal.
In reviewing the current legal framework, several crucial issues emerge. There is a need to assess whether the system fosters administrative accountability and respects the rights of taxpayers. We must question whether the elimination of the original objection time limit truly serves the public interest or merely opens the door to abuse of process. Finally, we must confront whether the continued absence of formal mediation is contributing to inefficiency or even facilitating corruption within the tax system.
Given these observations, several reforms are urgently required. First, the six-month rule must be formalized through regulations under TRAB and TRAT. Third, the law should be acceptance of the taxpayer’s objectionmust be restored. Second, mediation procedures must be formalized through regulations under TRAB and TRAT. Third, the law should be
ensure neutrality and fairness, the system must empower independent mediators and be
clarified to harmonize all references to mediation and amicable settlement. And lastly, to ensure neutrality and fairness, the system must empower independent mediators and be governed by transparent and predictable rules.
A Call to Action
The trajectory of tax dispute resolution in Tanzania reveals a story of early promise margins to the mainstream. Time limits must be enforced in favour of justicenot
remedies. Reforms must be swift and bold. The TRA, TRAB, TRAT, the judiciary, compliance by making tax justice visible and accessible. Mediation must move from the
followed by administrative and legislative backsliding. We have moved from a taxpayer protective system to one that increasingly burdens the taxpayer and limits accessible administration, enhance legal certainty and procedural fairness, and promote voluntary compliance by making tax justice visible and accessible. Mediation must move from the
margins to the mainstream. Time limits must be enforced in favour of justice not bureaucracy. Above all, dispute resolution must serve the interests of the nation, not just
the institution.
Let us not wait for another decade of legislative indecision. The time to act is now.
“Together we build our nation”