Tax Refund Administrative Practices and Value Added Tax Claims in Tanzania.

Saiteu, Baraka (2021) Tax Refund Administrative Practices and Value Added Tax Claims in Tanzania. African Multidisciplinary Journal of Development, VOL.10 (NO. 2).

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Abstract

Generally, the refund of value added tax claims to taxpayers is vital for the purpose of ensuring that businesses are not affected since businesses are just agents of the tax authority in collection of the value added tax. It is an established principle that refunds entails money paid back to the trader or a taxable person where in a particular prescribed accounting period his tax liabilities are not exhausted by allowable deductions or where its returns for prescribed accounting periods regularly result in excess credits. The refund once is processed is paid to the taxpayer through Interbank Settlement System (TISS). Registered taxpayers may not pay the correct amount of VAT for a number of reasons including error, deliberately understating their VAT liabilities, or through systematic attacks on the VAT refund system. Tanzania to a large extent has failed to establish the scale of losses of VAT because of the systematic ways used by taxpayers to manipulate the tax system. Fraud and evasion come in many forms, ranging from traders omitting the occasional sale from their accounting records to systematic suppression of sales and falsification of invoices. The methods to detect, investigate, and prevent VAT abuse are big challenges in most countries including Tanzania. In finding answers to the existing legal problems under the study doctrinal research methodology was employed. Conclusively, the value added tax law in Tanzania has not well articulated the methods to detect, investigate, and prevent value added tax abuse in VAT refund claims which causes loss of Government revenue. Besides, there is delay in verification of refund claims which affect timely payment of refund within the prescribed period. Delaying in payment of value added tax refund in respective taxpayer’s business affect the operations of the business which indirectly affect the collection of revenue by Tanzania Revenue Authority (TRA)since payment of different type of taxes depend on performance of the business. The money tied up with Tanzania Revenue Authority (TRA) could have been used to invest and expand the business portfolio for the growth of the economy and payment of the taxes required by different revenue laws. Keywords: Value Added Tax (VAT) Claims, VAT Refund Claims Administration, VAT

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