Technology curbs tax evasion in Tanzania

Since the implementation of the electronic revenue collection system dubbed Max-Malipo, Tanzania has seen an increase in the compliance levels among tax payers by 27 percent, helping the country fight tax evasion problem it has been grappling with for many decades.

This was revealed by Tanzania’s Minister for Finance and Economic Affairs, Dr William Mgimwa, who added that the system has now been implemented countrywide, accessible through mobile phones, banks and service centers spread across the country.

“The innovative system ascertained by Information Technology (IT) entrepreneurs has reduced congestion at office payment desks, addresses tax evasion, curbs cheating and increases efficiency. Tax payers can now pay taxes and dues promptly at their own convenience,” Mgimwa said.

Payments made in the system are sent directly to Tanzania Revenue Authority (TRA), making tracking and consolidation of the accounts much easier for the tax collection body.

Many companies have embraced the new system due to the convenience it offers, with examples of such companies including DStv, DAWASCO, TANESCO among others.

Tax evasion has continued to cripple development efforts of many African countries, with Oxfam International saying that sub-Saharan governments lose more than $38.4 billion in tax revenues every year, due to tax evasion by international companies operating in their territories.

With the adoption of technology in tax collection, many African governments are positive that collection will be enhanced to provide them with enough money for infrastructure development.