News Alert - Significant setback for tax cases awaiting hearing in the Court of Appeal

Tax disputes go through a three tier adjudication process. The initial appeal is heard by the Tax Appeals Board. An appeal from the Board
goes to the Tax Appeals Tribunal. A final appeal lies with the Court of Appeal of Tanzania. The Tax Appeals Board sits as a panel of three
people, the Chairman is invariably a fairly senior and experienced magistrate. The Tribunal which also sits with three is chaired by a judge
of the High Court. In either case the Chairman writes the judgment after a joint session with the members to deliberate the points in
dispute.
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In a ruling delivered by the Court of Appeal on 15 January 2010 based purely on a procedural point, the Court of Appeal declared that it
was not enough for the Tribunal judgment to be signed by the Chairman, all three members of the panel must sign it (Ami Port Operations
(T) Ltd vs The Commissioner for Income Tax). The ruling had serious implications because a large number of Tribunal judgments were
until then signed by the Chairman only. Pending appeals affected had to be withdrawn from the Court of Appeal or else they would fail
when called for hearing. Legal counsel for taxpayers and TRA lawyers frantically withdrew the filed appeals and went back to the Tribunal
to seek rectification of judgment. They also filed in respect of each case an application in the Tribunal to request enlargement of time to
re-lodge the appeals in the Court of Appeal because the appeals were already time barred. This was quite a process and for us took
about a year to accomplish, frustrating for both taxpayer and counsel.
One would have thought that the Court and everybody involved would have learned from what was quite frankly a pointless exercise. No
quite it would seem, because the Court of Appeal has done it again in Mbeya Intertrade Company Ltd vs. Commissioner General. This
was a tax dispute which went to the Tax Appeals Board in 2003. The taxpayer was aggrieved by the decision of the Board and lodged an
appeal to the Tribunal but failed again on 29th January 2005. For some reason the appeal to the Court of Appeal was not filed until 2010
and it took another five years for the Court to call it for hearing. When that happened on 20th March 2015 the Court dismissed the appeal
because the decree attached to the record of appeal was not signed by all three members who heard the case at the Tribunal level.
As before, the immediate implication is that nearly all tax appeals now lying in waiting in the Court of Appeal are affected and must be
withdrawn so that this procedural error can be corrected by the Tribunal. There are 35 tax cases awaiting hearing by the Court of Appeal.
All of them are affected by this Court of Appeal ruling. The disputed tax tied up is a staggering 168.3 billion shillings! Some of these cases
have been pending for nearly 8 years.
When the Court of Appeal did this in 2010, Ako Law had three of its appeals affected. This time we have 10 affected, the process of
untangling could take about a year. It seems the Court of Appeal is too eager to dismiss on technicalities instead of focusing on
substance. This undermines the indication from the Chief Justice given last year to find a way of expediting the hearing of long pending
tax cases and deepens the sense of frustration of taxpayers and the tax authority. The worst part is that when we finally get round to relodging the affected appeals, they will land at the bottom of the queue facing another four to five year wait. Among these are urgent
appeals which were eagerly awaited because of the wide industry implication they have and taxpayers are desperate for guidance from
the Court. This includes cases on impairment provisions brought by Barclays bank, CRDB bank and Akiba to contest TRA refusal to allow
impairment losses as a tax deduction. There are also the Tullow Oil and Shell BV appeals cases on the equally burning issue of
withholding tax on services performed offshore for mining and gas companies undertaking exploration in Tanzania. It would now appear
that both these genuinely urgent matters will not be resolved soon as wed all wanted.

About Ako Law

Ako Law is a leading tax law firm in Tanzania specialising in tax dispute resolution and general tax advising. If you have any questions
relating to this news alert or any other tax problem, please contact us using the details provided.
Dr Kibuta Ongwamuhana, Managing Partner
Email:
kibuta.ongwamuhana@akolaw.com
Mob:
+255 754 292 200
Alan Kileo, Senior Associate
Email:
alan.kileo@akolaw.com
Mob:
+255 767 694 254
Wilson Mukebezi, Senior Associate
Email:
wilson.mukebezi@akolaw.com
Mob:
+255 766 645 690
Salome Gondwe, Associate
Email:
salome.gondwe@akolaw.com
Mob:
+255 767 850 027

This news alert is intended for information only. For anything requiring action please seek advice. Ako Law accepts no
responsibility for loss occasioned by reliance on material contained in this news alert. No part of this news alert may be
construed as tax advice upon which to act or refrain from acting.