Transformative Journey of the Zanzibar Revenue Authority (ZRA) in Modernizing and Tax Administration in Zanzibar.

Introduction

In an effort to cultivate a user-friendly and streamlined tax administration in Zanzibar, the Revolutionary Government of Zanzibar enacted the new Zanzibar Revenue Authority Act, Number 11 of 2022 (referred to herein as the ZRA Act) on December 29, 2022, which took effect on January 13, 2023.

This landmark legislation established the Zanzibar Revenue Authority (ZRA), superseding the Zanzibar Revenue Board (ZRB), which had been operational since 1996. The ZRB, instituted by the Zanzibar Revenue Board Act No. 7 of 1996, was tasked with administering inland revenue laws and tax collection in Zanzibar. The functions formerly carried out by the ZRB are now overseen by the new ZRA, including the administration of all non-union taxes in Zanzibar.

The reform initiative was aimed at fostering an efficient and user-friendly fiscal regime, with a focus on establishing an effective tax administration of revenue laws as a fundamental component in driving sustainable economic growth in Zanzibar. The objective is to institute a tax system that is fair, convenient, certain, and efficient.

The establishment of the ZRA has brought about several changes, heralding a new era of efficient and effective tax administration and collection in Zanzibar.

Mandate and Responsibilities/Functions of the ZRA

ZRA is visioned to be a center of Tax Administration Excellence by 2025. This will well be achieved through a mission of promoting voluntary tax compliance and build public confidence through effective, efficient transparent and fair administration of relevant tax laws and providing quality customer services by using modern and innovative technology with the highest possible degree of integrity that optimize revenue collection.

Among the major functions of ZRA, include:

1. To administer and give effect to the nine (9) laws and regulations concerning revenue collection in Zanzibar as set out in the ZRA in assessing, collecting and   accounting for all revenues to which those laws apply;

2. To monitor, oversee, and coordinate the revenue collection work to ensure the fair, efficient and effective administration of revenue laws;

3. To advice the Minister and other relevant organs of the Government on matters pertaining to fiscal policy and tax administration;

4. To take effective steps to counteract fiscal frauds and various devices of tax evasion and leakage of revenue; and

5. To promote voluntary tax compliance and maximize revenue collection by widening the tax base.

Taxes Administered by ZRA/Laws administered by ZRA

The ZRA is responsible for administration of all domestic non-union taxes in Zanzibar. In pursuit of that, ZRA therefore administers the Value Added Tax, the Stamp Duty, Hotel and Restaurant Levy, the Airport and Port Service Charges, the Petroleum Levy, the infrastructure taxes, the land rent, the property tax, the excise duty, the motor vehicle registration and the driving license.

In administration of all the aforesaid taxes, ZRA apply the respective nine tax laws including the Tax Administration and Procedures Act No. 7 of 2009, and any other law which is or may come into force to mobilize and collect revenue in Zanzibar.

ZRA has administrative offices in Unguja and Pemba. In reducing convenience to taxpayers, there have been established six ZRA tax regions, tax service centers and state of the art ZRA head office in Unguja, Mazizini, Fumba Road, 71125, Urban West District, Pemba head office at Gombani.

Technology and Digital Transformation

The success of ZRA can be attributed to its efficient operations and the development of technological infrastructure, particularly through the implementation of electronic systems such as the Virtual Fiscal Management System (VFMS) for issuing electronic receipts.

A notable technological milestone achieved by ZRA is the launch of the Zanzibar Integrated Domestic Revenue Administration System (ZIDRAS), which replaces the Zanzibar Integrated Tax Administration System (ZITAS) that faced numerous challenges.

ZIDRAS comprises nine modules of tax administration, all of which operate electronically. These modules include e-registration, e-filing, e-payment through Zan Malipo, debt management, and reporting. Furthermore, the system is designed to be integrated with other taxpayer systems and institutions such as the TRA and Immigration.

Introduced in April of last year in 2023, ZIDRAS saw the registration of at least 2,340 taxpayers under this new, user-friendly system.

The achievement of these milestones has been bolstered by public awareness campaigns emphasizing the importance of tax compliance,

Taxpayers Registration  

The ZRA Act empowers the ZRA to establish and maintain convenient and efficient systems for the identification of taxpayers and the collection of revenue from both local and potential foreign taxpayers.

As per Section 5(2) of the Tax Administration and Procedure Act No. 7 of 2009, any individual or entity with an annual turnover exceeding Tanzanian Shillings five million (5,000,000/=) is mandated to apply for registration as a taxpayer at any ZRA office.

Registered taxpayers are classified into small, medium, or large categories based on their annual turnover. Small and medium taxpayers are those with annual turnovers ranging from Tanzanian Shillings five million to one hundred million, and they are registered under the Stamp Duty category. Conversely, taxpayers with annual turnovers exceeding one hundred million are registered under the VAT category.

Registration as a taxpayer can now be conveniently done online through the Zanzibar Integrated Domestic Revenue Administration System (ZIDRAS), accommodating various entity types such as individuals, companies, NGOs, partnerships, and cooperatives.

Taxpayers Filling of Returns

Registered taxpayers at ZRA have convenient of filling their monthly tax returns at the 20^th of the preceding month electronically through the ZIDRAS system. The system accommodates filed returns remotely. The taxpayer needs not to physically visit ZRA office for filling their respective tax returns, instead, they may file their tax returns directly from their respective offices.

This is one of the convenient modes of tax system in Zanzibar which facilitate business operations through access to online filling of tax returns. The taxpayers are given ample time to concentrate with the business rather than substantially engaging with the taxman.

Taxpayers Tax Payments

ZRA has prepared a convenient environment for registered taxpayers to pay their respective taxes electronically through banks of their choice. The registered taxpayers pay their respective taxes through the use control number requested and generated through ZIDRAS integrated with ZANMALIPO at taxpayers’ office.

The issued control number to the taxpayers is conveniently used for payments of tax by the taxpayers in the banks of their choices. The electronic mode of tax payments in Zanzibar is easy, safe, faster, convenient and facilitates business operations.

Right of a taxpayers

In Zanzibar and at ZRA, taxpayers enjoy maximum protections. They enjoy the following rights:

• Impartial treatment: Taxpayer has a right to an impartial application of the tax laws when fulfilling his/her tax obligation so as to enable taxpayer pay the required amount of tax.
• Privacy and Confidentiality: Taxpayer has a right to privacy and confidentiality for private and business information submitted to ZRA unless the law allows the exposure of such privacy and or confidentiality.
• Presumption of Honesty; The taxpayer has a right to be presumed honest unless evidence to the contrary exists.
• Objection of Tax Assessment: Taxpayer has a right to object to an assessment or any other decision made by ZRA to the extent of which that right is restricted by the law.   
• Tax incentives and Exemption under the Tax Laws: Taxpayers have the right to plan their tax affairs so as to obtain incentives and exemption allowed under the tax laws.

Penalties to tax evaders

For many years, tax compliance in Zanzibar has been encouraging as several strategies are established and implemented in the islands purposely for the tax payer to comply with tax obligations.

ZRA Act empowers Commissioner General or any authorized Officer to take effective steps to counteract tax evasion, tax avoidance and loss of Government revenue.  This sends a clear message on the Zanzibar’s direction in terms of ensuring that the Government gets its fair share of tax.

Another positive move by the ZRA Act is the power given to ZRA to promote better understanding of taxation to the taxpayers which is crucial in promoting voluntary tax compliance.

Failure to comply with various provisions of tax laws requirements may attract penalties and interest in tax recovery.

ZRA contribution to Zanzibar economy/ZRA achievement

As a key player in Zanzibar’s financial ecosystem, ZRA contributes significantly to the economic landscape of Zanzibar by overseeing the collection of revenue to support the country’s economic development agenda while facilitating investment and economic activities.

Additionally, ZRA collaborates with other institutions, like the Tanzania Revenue Authority, to enhance efficiency and strengthen the overall economic infrastructure.

ZRA has established an efficient tax system which consistently and massively attain her monthly tax revenue targets through, among other things, broadening tax base of taxpayers and improving taxpayers’ services throughout ZRA regional offices and tax service centers in Unguja and Pemba.

The Government in turn is using the collected tax revenues to improve road infrastructures, Water and Power infrastructure and social services. This improves the business environment which facilitate business growth.

ZRA Future vision

The vision of Zanzibar Revenue Authority has been well translated in the Fourth Corporate Plan (CP4).  This Corporate Plan focuses on “Strengthening Tax Administration Through Modernization” on key strategic areas which include: optimization of revenue collection; improvement of quality of services and compliance; innovation in digitization and technology harness; and improvement of staff performance. 

ZRA Business Facilitation Role

ZRA is highly committed to continue facilitating business operations and growth in Zanzibar through fairness in administration of tax laws, establishing convenient tax services including the use of system in tax administration, provision of strategic tax education and having an efficient tax system. This is ZRA which administers effective and efficient Zanzibar tax system for supporting business growth in Zanzibar.

ZiBi Team