B4: PUBLIC FINANCE AND TAXATION

TOPIC : TAX ASSESSMENT

Compiled by
SHAKIRU ABDUL MTANDA.
MSc. A&F,CPA(T),BAC

CPA(T). SHAKIRU ABDUL MTANDA

 To be covered

➢ Payment of tax by installment

➢ Due date for installment
➢ Amount of installment
➢ Types of Assessment
✓ Self assessment
✓ Jeorpady assessment
✓ Adjusted assessment
✓ Commissioner best judgement assessment
➢ Return on income and Statement of estimated income
➢ Person not obliged to file ROI
➢ Interest, penalties and offences
CPA(T). SHAKIRU ABDUL MTANDA
 PAYMENT OF TAX BY INSTALMENT. S.88 of ITA
S.88 of ITA: Person obliged to pay tax by installment
A person who has:
❖Business income for the year of income
❖Investment income during the year of income
❖Employment income for the year of income for which the employer did
not with hold tax under S.81 of ITA.

Income tax payable by installment shall be paid in 4 installment.

CPA(T). SHAKIRU ABDUL MTANDA

 S.88 of ITA

INSTALLMENT DUE DATE

1ST Installment (1st Quarter) By the end of 3rd month from start of YOI ( 31st March
for normal calendar year YOI) or last working day of
march.
2nd Installment ( 2nd Quarter) By the end of 6th month from start of YOI or last
working day of June.

3rd Installment ( 3rd Quarter) By the end of 9th month from start of YOI or last
working day of September.

4th Installment ( 4th Quarter) By the end of 12th month from start of YOI or last
working day of December.

CPA(T). SHAKIRU ABDUL MTANDA

 S.88 of ITA
Amount of installment.
A−C
Installment =
B

Where
A= Total estimated tax liability/Revised estimated tax liability
B= Number of installment remaining including the current one.
C= Tax credit.
✓ A non final withholding payment S.87 of ITA
✓ Previous installment S.88 of ITA
✓ For a single installment S.90 of ITA
✓ For Jeopardy assessment

CPA(T). SHAKIRU ABDUL MTANDA

 TYPES OF ASSESSMENT
a) Self assessment: S.46 of TAA 2015
✓This s when tax payer assess his or her own income, file return and pay taxes
voluntary.
✓The tax system in Tanzania is designed in a such a way that tax payers shall do their
tax compliance on self assessment basis.
✓For income tax it starts from filling statement of estimated income and ends on
filling of ROI

b) Jeopardy assessment: S.47 of TAA.

✓This is when the tax payer is required to file return and pay tax before due dates.
✓The commissioner forces the tax payer to file return and pay taxes before due date.
✓If the tax payer can not do so the commissioner may use his best judgement and
information available to issue jeopardy assessment.

CPA(T). SHAKIRU ABDUL MTANDA

 TYPES OF ASSESSMENTS

Reasons for Jeopardy Assessment.

✓If the tax payer is about to cease business in URT.
✓Tax payer is about to leave URT
✓Tax payer is being liquidated.
✓Any other reason the commissioner may find it appropriate.
c) Adjusted assessment: S.48 of TAA
▪ The commissioner is given power to adjust any assessment with 5 years
from due date to file return.
▪ Incase of any significant loss of government revenue the commissioner
may adjust any assessment even if it is later than 5 years.

CPA(T). SHAKIRU ABDUL MTANDA

 TYPES OF TAX ASSESSMENT

▪ The commissioner shall revise the assessment if there is reasonable

grounds to believe that tax payer did not pay proper taxes basing on self
declaration done.
▪ The commissioner shall initiate review of tax file of tax file and come up
with necessary adjustment.
d) Commissioner best judgement assessment: S.89 of ITA
This is when the commissioner uses his best judgement and information
available to assess taxes to tax payer who can not establish their own
income and tax liability there on.

CPA(T). SHAKIRU ABDUL MTANDA

 STATEMENT OF ESTIMATED TAX PAYABLE/ PROVISIONAL
RETURN: S.89 of ITA
A statement showing estimated income and estimated liability of a tax payer there on.
It shall be filled to TRA electronic filling system by end of 3rd month from start of the
YOI. It mark the start of self assessment.

RETURN ON INCOME (ROI); S.91 of ITA

➢A statement showing actual income and actual tax liability of a tax payer.
➢It is based on the audited figure.
➢It must be signed by the person making it.
➢Must be signed by CPA-PP
➢It must be filled in the TRA electronic filling system within 6 months from the end
of the YOI.

CPA(T). SHAKIRU ABDUL MTANDA

 RETURN ON INCOME (ROI); S.91 of ITA
➢The return will show the actual income and its source (BI,EI,II, local income
or foreign income).
➢Allowable and disallowable deduction
➢Proper working for wear and tear.
➢Any unrelieved loss bought forward.
➢Tax credit available for NFWP or for previous installment paid.
➢Final tax liability
➢Tin of the tax payer
➢YOI for which the return relates to
➢Must be attached with certificate of refusal by CPA-PP (If disagree with the
return S.38 of ITA
➢Must be attached with withholding certificate S.85 of ITA.
CPA(T). SHAKIRU ABDUL MTANDA
 RETURN ON INCOME (ROI); S.91 of ITA
▪ Due date of filling ROI
Shall be filled within 6 months from the end of the YOI.
Note withstanding subsection (1), a person whose financial statement is audited by the CAG shall file ROI
for the year of income with the commissioner not later than 9 month after the end of YOI (PFA 2024)

PERSONS NOT OBLIGED TO FILE ROI S.92 of ITA

➢ A person who doesn’t have any income chargeable to tax.
➢ An individual whose income is solely from employment and withholding tax was deducted by the
manager/employer under S.81 of ITA
➢ An individual whose income is solely gain referred to under S.90(1) of ITA i.e. Gain on sale of land,
building situated in URT, shares and securities held in URT, Petroleum rights and mineral rights which
attract a single installment.
➢ A non resident person other than the one with domestic permanent establishment- who has no income
chargeable to tax or whose income is solely gain referred to under S.90(1).
➢ A non resident individual whose income for the year of income consist exclusively of employment.

CPA(T). SHAKIRU ABDUL MTANDA

EXTENSION OF DUE DATE TO FILE ANY RETURN: S.39 of TAA

✓Upon application by the tax payer in writing the commissioner is given

power to extend the due date to file any return by giving a reply in
writing.
✓The commissioner can extend due date to file any return for up to 30
days only.
✓This extension does not extend also the due date to pay any tax due on
that return.
✓The application above must be filled to the commissioner latest by 15
days before due date to file the return.

CPA(T). SHAKIRU ABDUL MTANDA

 INTERESTS AND PENALTS
INTEREST FOR UNDER ESTIMATION: S.75 of TAA
➢If it happens that the statement of estimated income and the return of
income differ, the variation will be accepted up to 20%(error).
➢If error is above 20% shall be penalized for that error by charging
interest for under estimation.
TEST FOR UNDER ESTIMATION.
This is when taxable income or tax liability on statement of estimated
income varies with the one reported on ROI.
𝑇𝐿 𝑜𝑛 𝑆𝐸𝐼 𝑇𝐿 𝑜𝑛 𝑅𝑂𝐼 −𝑇𝐿 𝑜𝑛 𝑆𝐸𝐼
If- × 100% < 80% OR × 1𝑂𝑂% > 20%
𝑇𝐿 𝑜𝑛 𝑅𝑂𝐼 𝑇𝐿 𝑜𝑛 𝑅𝑂𝐼
This means there is interest for under estimation and hence interest will be
charged for under estimation.

CPA(T). SHAKIRU ABDUL MTANDA

 INTERESTS AND PENALTS
• Interest for under estimation shall be calculated using BOT rates
compounded monthly for the period from due date to file SEI to
maximum of due date to file ROI and such interest shall be charged on
the difference between tax liability on the ROI had correct estimate being
done and tax liability on the SEI/revised estimate.
𝑛
𝑅
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑓𝑜𝑟 𝑢𝑛𝑑𝑒𝑟 𝑒𝑠𝑡𝑖𝑚𝑎𝑡𝑖𝑜𝑛 = 𝑃 1 + −1
12
Where
P = Principal amount i.e TL on ROI – TL on SEI
R = BOT rate per annum
𝑅
r = = BOT rate per month
12
n = Number of months of under estimation ( minimum of 9 months and maximum of 15 months).

CPA(T). SHAKIRU ABDUL MTANDA

 INTERESTS AND PENALTS
INTEREST FOR LATE PAYMENT OF TAX: S.76 OF TAA
REPLACING S.100 OF ITA.
Interest for late payment of any tax shall be calculated on the amount not
paid on the due date using the BOT rate compounded monthly for period it
remain outstanding.
𝑛
𝑅
𝐼𝑛𝑡𝑒𝑟𝑒𝑠𝑡 𝑓𝑜𝑟 𝑙𝑎𝑡𝑒 𝑝𝑎𝑦𝑚𝑒𝑛𝑡 𝑜𝑓 𝑡𝑎𝑥 = 𝑃𝑢𝑡 1+ −1
12
Where
Put= principal amount which is the amount of tax not paid by due date
R = BOT rate per annum
r = BOT rate per month
n = number of months of failure to pay tax by due date

CPA(T). SHAKIRU ABDUL MTANDA

 INTERESTS AND PENALTS
PENALTIES FOR KEEPING IMPROPER RECORDS: S.77 of TAA
replacing S.98(1) of ITA.
❖A person is required under S.80 of ITA to atleast maintain cash book,
purchase ledger and sales ledger.
❖Also under S.35 of TAA requires the tax payer to maintain records for
atleast 5 years.
❖If a person has a pending objection or appeal shall keep the record even
after 5 years until when the matter is finally determined.
❖Failure to keep such record properly, shall attract a penalty under S.77 of
TAA calculated as

CPA(T). SHAKIRU ABDUL MTANDA

 INTERESTS AND PENALTS
✓For individual : 1CP
✓For corporate : 10CP
Where by 1CP is equivalent to TZS 20,000/=
Currency point S.4 of TAA.
Any amount determined by the minister responsible for finance and can be
charged at any time and into accounts changes in inflation rates.
2nd Schedule of TAA detailed that 1CP = TZS 20,000

CPA(T). SHAKIRU ABDUL MTANDA

 INTERESTS AND PENALTS
PENALTIES FOR LATE FILLING OF RETURN S.78 replacing S.98 of
ITA.
Penalties for late filling of any return shall be calculated as the higher of
a) 2.5%( TL on that return – Tax paid before filling return )
OR
b) Currency point
✓For corporation 15CP 𝑥 20,000 = 300,000
✓For individual 5CP 𝑥 20,000 = 100,000
Take the higher and multiply for each month of failure.
OTHER PENALTIES: S.79 – S.91 of TAA.

CPA(T). SHAKIRU ABDUL MTANDA

 THE END

BE EVER BLESSED BEYOND MEASURES!!

CPA(T). SHAKIRU ABDUL MTANDA