Why do NGOs and Corporate Societies in Tanzania Need a Special Attention on Tax Laws?

In recent years, Tanzania established different tax, legal and other reforms for the aim of attain sustainable efficiency system of operations. These reforms among other things it aims to improve efficiency in Tax collections, Availability of data/other information across industries and efficient standard of operations in government sectors. Some of these reforms affect business in both Taxes and compliance ground.

Ashery Mbasha is Managing Partner at Brilite Associates, He will share his experience from Audit line for the challenges that are facing Non-Governmental Organization and Cooperative societies in Tanzania on the side of Tax, accounting and finance. Ashery is the qualified Auditor with more than 8 years of professional experience in accounting, audit and tax sector.

Background on NGOs and Cooperative societies.

Previous years, NGOs and Cooperative societies were exempted from Corporate and VAT taxes. Other taxes were then paid as usual like Employment Taxes, Withholding taxes, SDL and Stamp duties. Recently, there are new changes taken by the government and TRA that may result or necessitates NGOs and Other Cooperative societies to be keen to avoid the risk of penalties and fine in the future.

From our experience most of these types of organizations (Small and Medium) are operating like the world of tax is not concerned them. In this article, we will highlight areas where these types of organizations can be in risk, and they will need to take a very quick corrective measures.

This Non-compliance might result in penalties or fine as per Cooperative societies Act, 2013 Sec 126 (1)

“…..commits an offence and upon conviction shall be liable to a fine of not less than five million shillings and, where such offence has been committed by an individual, to imprisonment for a term of not less than two years in addition to or in lieu of such fine. (2) In additional to any sanction or penalty which may be imposed under this Act, the court may order the offender to compensate any loss occasioned or confiscate the properties of such offender

2. Non-Governmental organization Act 2002 Sec 10 (2) which require that

 ” Within three months from the end of each financial year, the Board shall submit to the Controller and Auditor General accounts of the Board together with- (a) a statement of financial activities and income and expenditure during that financial year, and (b) a statement of assets and liabilities of the Board existing at the end of such financial year”

 Most of NGOs, they have been overlooking this section which currently they are required to submit their annual return on time either online or physically deliver to the office of the registrar in Dodoma.

 Any offences and non-compliant under the same Act will be penalized as per non-Governmental organization Act 2002 (Part vi) Sec 35 & 36.

As the requirement of most of the donor funded projects under NGOs are strictly not allow penalties and fines, this is the key area where NGOs should now pay attention to ensure they are compliant with.