TRA’s Powers of Tax Recovery

The Tax Administration Act grants the Commissioner General, who heads the TRA, various powers to recover unpaid taxes. These powers are typically exercised when a taxpayer fails to pay their tax liability on time. Here are some key provisions:

• Suit for Unpaid Tax (Section 59): The Commissioner General can file a lawsuit in court to recover unpaid taxes. If the court rules in favour of the TRA, it can issue an order for the taxpayer to pay the outstanding amount. This order can potentially be enforced through various means, including seizure of assets, which could include bank accounts.
• Charge Over Assets (Section 61): The Commissioner General can create a charge in favour of the government over a taxpayer’s assets if they fail to pay tax on time. This charge essentially gives the government a legal claim over the assets, which can be sold to recover the unpaid tax. While the Act explicitly mentions registering this charge on land titles, it doesn’t preclude other assets like bank accounts.
• Sale of Charged Assets (Section 62): Once a charge is created, the Commissioner General can sell the charged assets to recover the unpaid tax. The sale proceeds are first applied to cover the tax liability, any costs associated with the charge and sale, and any other outstanding tax liabilities. The remaining amount, if any, is returned to the taxpayer.
• Third Party Debtors (Section 67): The Commissioner General can issue a notice to a third party who owes money to a taxpayer, requiring them to pay the owed amount directly to the TRA to settle the taxpayer’s outstanding tax liability. This provision could potentially be used to collect funds from a taxpayer’s bank account if the bank is considered a third-party debtor.

Other Relevant Information

• Tax Revenue Appeals Act: This Act establishes the Tax Revenue Appeals Board and the Tax Revenue Appeals Tribunal, providing a mechanism for taxpayers to challenge tax decisions and assessments. If a taxpayer disputes a tax liability, they can follow the appeal process outlined in this Act before any forceful recovery actions are taken.
• Finance Act, 2022: This Act includes amendments to various financial laws, including the Bank of Tanzania Act. It lists the TRA as one of the national competent authorities that can access financial information for specific purposes, such as the prevention of money laundering and funding of terrorism. While this doesn’t explicitly grant the TRA power to seize funds from bank accounts for tax recovery, it suggests that they have some level of access to financial information.