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Amicable Settlement of tax cases: Time for formal Guidelines or Regulations?

Christopher Mwanilwa

Tax disputes are inevitable. In Tanzania, these disputes are settled through tax appellate machineries, regulated by the Tax Revenue Appeals Act, (CAP. 408). The hierarchy of appellate machineries in Tanzania are as follows: The Tax Revenue Appeals Board (TRAB), Tax Revenue Appeals Tribunal (TRAT) and the apex appellate machinery which is the Court of Appeal of Tanzania (CAT).

As part of improving the tax dispute resolutions between the Taxpayers and the TRA, the Finance Act, 2021 amended Section 22 of the Tax Revenue Appeals Act, (CAP. 408) allowing disputing parties to amicably settle tax cases seating at TRAB and TRAT. Taxpayers are allowed to make an application at any stage of the proceedings, but it should be before the judgement is delivered. Since the inception of amicable settlement of tax cases method, there have been some notable successes which includes several tax cases being resolved.

Taxpayers and other stakeholders lauded the introduction of this method of settling the tax cases with the expectation that this way will help resolve the tax cases backlog problem at the appellate machineries. Due to backlogs, it sometimes takes years for a particular tax case to be decided. The delay in decisions would  potentially further affect taxpayers in case of lost appeals, as tax liabilities accrue up to the month of the tax casedecision.

Whilst there are some notable successes in resolving tax cases through this method, there are areas of improvements which the government can consider. One avenue is the introduction of the formal guidelines or regulations to guide the whole process of amicable settlement of tax cases. As of now, there are no guidelines or regulations to guide the process.  

In the absence of these guidelines, several challenges have faced taxpayers who opt to use the  amicable settlement of tax cases method to resolving their tax disputes. One of the notable challenges has been the delay from the TRA in attending the applications for amicable tax settlements, as well as excessive back and forth, postponing resolution.

Another challenge experienced by the taxpayers has been lack of clear guidance on who will be the facilitator(s) of the negotiations process. There have been instances where the same tax officers who attended the client tax audits, or determination of the taxpayers’ objections are being directly involved in the appeal process for the same taxpayer. This approach contravenes the impartiality principle required when settling tax cases under the amicable settlement of tax cases method.

Learning from other African countries with amicable settlement of tax cases

Countries like Kenya and South Africa have adopted amicable settlement of tax cases  in resolving some tax disputes. The mentioned countries have regulations which guide the whole process.

For example, Kenya issued the Tax Procedures (Settlement of Tax Disputes Out of Court or Tribunal) Regulations, 2020 which guides the conduct for amicable settlement of tax cases. The regulations laid out the tax disputes which may be settled out of court or tribunal, facilitators of the process, settlement process, termination of the proceedings, settlement agreements, filing of settlement agreements, enforcement of the settlement agreements etc. Also, the regulations provides the timeline for resolving tax cases under this amicable settlement of tax cases which is only 90 days (also adopted by South Africa).

Due to effective utilization of the amicable settlement of tax cases method, Kenya has recorded some notable successes. Based on media outlets, last year the Kenya Revenue Authority (KRA) managed to unlock Ksh 10bn through the amicable settlement of tax cases, through the first half of the financial year 2021/2022. At that time, KRA had managed to resolve 57% of the cases tabled for resolution for that year of income, increasing the trust of the taxpayers choosing to resolve their tax cases through amicable settlement of tax cases method.

In my view, due to its importance, it is high time for Tanzania to issue the regulations or guidelines to manage the process of amicable settlement of tax cases in a similar manner to other African countries. If the process is well managed, taxpayers can reap benefits through timely tax cases settlement, saving time and financial resources. Benefits are also there for TRA, who can unlock taxes that are tied up with the cases seated at various appellate machineries, hence boosting tax collections. 

Christopher Mwanilwa is a Senior Tax Consultant with Deloitte Consulting. He can be reached at
The views explained herein are those of the author and do not necessarily represent the views of Deloitte. 

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