Assessment of the Effectiveness of Tax Administration Reform on Tanzania’s Tax System Productivity

by | Jul 3, 2025 | AMTJ, AMTJ 2025 I1

Assessment of the Effectiveness of Tax Administration Reform on Tanzania’s Tax System Productivity

Author: Amos James Ibrahim

ISSN: 2709-8575
Affiliations: Lecturer at the Institute of Tax Administration Tanzania
Source: African Multidisciplinary Tax Journal, Volume 5, Issue 1 (2025), p. 194–207
https://doi.org/10.47348/AMTJ/V5/i1a9

Abstract

This study assesses the effectiveness of tax administration reform on Tanzania’s tax revenue productivity by evaluating how the reforms have influenced the buoyancy of individual taxes using yearly time series data for 1996 to 2017. This period is associated with the introduction of massive reform in the Tanzanian tax administration. The study compares its results with those of Osoro, who evaluated the Tanzanian tax system productivity for 1960 to 1990. To ensure the comparability of results, this study used a similar methodological approach to that used by Osoro. The main objective of this study is to investigate if the reform that took place managed to generate enough tax. The results show that both the tax system and individual taxes are buoyant for the period under review. Our results suggest that the administrative tax reforms that took place have had a significant impact on revenue generation in Tanzania. Thus, we recommend that the government should continue conducting tax administrative reform to cope with the ever-changing business environment.

Implementation of Cooperative Compliance Programme in Africa: Which Way Forward for Kenya?

by | Jul 3, 2025 | AMTJ, AMTJ 2025 I1

Implementation of Cooperative Compliance Programme in Africa: Which Way Forward for Kenya?

Authors: Alex Oguso, Adrian Gitamo

ISSN: 2709-8575
Affiliations: Corresponding Author: Research Economist and Manager, Research and Tax Modelling Unit, Kenya Revenue Authority; Researcher, Surveys and Business Analysis Unit, Kenya Revenue Authority
Source: African Multidisciplinary Tax Journal, Volume 5, Issue 1 (2025), p. 208–234
https://doi.org/10.47348/AMTJ/V5/i1a10

Abstract

This study aims to establish the way forward for designing and implementing a cooperative compliance programme (CCP) for Kenya. Specifically, the paper seeks to examine the current relationship management framework in Kenya through the lens of a cooperative compliance framework and explore the strategic options for Kenya in designing a CCP to meet its specific needs. The study adopts a mixed research approach: desk research, key informant surveys and focus group discussions. The study identifies gaps in the current relationship management framework that need to be addressed. These included the need to fully understand the unique characteristics of large taxpayers and the context in which tax planning occurs; proper planning and coordination of tax audits by various departments; better handling of tax disputes (which should be centralised and well-coordinated); prompt refund payment; and effective engagement of taxpayers in the formulation of new tax policies and amendment of tax laws. Further, the study proposes strategic initiatives for the design and implementation of a cooperative compliance programme in Kenya. The study concludes by providing a way forward for Kenya, which includes a multi-stakeholder approach to designing a cooperative compliance programme, piloting the programme before full adoption, and implementing the programme through a phased approach.

The Impact of Tax Lottery Design on Tax Compliance: A Lab Experiment in Tanzania

by | Jul 3, 2025 | AMTJ, AMTJ 2025 I1

The Impact of Tax Lottery Design on Tax Compliance: A Lab Experiment in Tanzania

Authors: Cyril Chimilila; Remidius Ruhinduka; Vincent Leyaro

ISSN: 2709-8575
Affiliations: Lecturer, Institute of Tax Administration, Tanzania; Senior Lecturer, School of Economics, University of Dar es Salaam; School of Economics, University of Dar es Salaam
Source: African Multidisciplinary Tax Journal, Volume 5, Issue 1 (2025), p. 235–253
https://doi.org/10.47348/AMTJ/V5/i1a11

Abstract

Low tax compliance undermines tax revenue mobilisation in developing countries. Various countries have adopted tax lotteries and rewards as alternative strategies to promoting tax compliance. However, there is limited empirical evidence on how best to design tax lotteries. This study used a lab experiment to study the effect of tax lottery design on compliance. The study used two lottery designs – a lottery of high reward and low probability and a lottery of low reward and high probability. The study found that there was higher compliance (85.2%) for the high reward, low probability lottery compared to the 81.9% for the low reward, high probability lottery; compliance in the control group was 69.8%. Using logistic regression, the study estimated the treatment effect. A lottery of high reward and low probability has a higher treatment effect: 0.1554 compared to 0.1341 for the low reward, high probability lottery. This study concludes that the design of lottery rewards has a significant effect on compliance. It contributes to the literature on the effect of tax lottery design on tax compliance and highlights the need for strategically designing tax lottery rewards to encourage higher compliance.

Leveraging Artificial Intelligence for Enhanced Tax Collection in Developing Nations: A Systematic Literature Review

by | Jul 3, 2025 | AMTJ, AMTJ 2025 I1

Leveraging Artificial Intelligence for Enhanced Tax Collection in Developing Nations: A Systematic Literature Review

Authors: Joy Mudome; Joshua Rumo A. Ndiege

ISSN: 2709-8575
Affiliations: Senior Business Systems Analyst, Kenya Revenue Authority; Assistant Professor, Information Systems at United States International University (USIU)-Africa
Source: African Multidisciplinary Tax Journal, Volume 5, Issue 1 (2025), p. 254–275
https://doi.org/10.47348/AMTJ/V5/i1a12

Abstract

The integration of artificial intelligence (AI) into tax collection processes has emerged as a transformative approach in improving efficiency, accuracy and compliance for national governments. Despite its potential, literature on AI’s role in tax collection, especially in developing countries, remains scarce. This paper makes a contribution to this area by conducting a systematic literature review aimed at investigating the current state of AI implementation in tax collection in developing nations and identifying future research opportunities. The review synthesises findings from twenty selected studies published between 2014 and 2024. The findings indicate that AI facilitates tax compliance through its capacity to automate repetitive tasks, enhancing data processing capabilities and detecting anomalies for targeted enforcement efforts. Moreover, AI tools offer potential in reducing tax evasion by enabling real-time transaction analysis and value chain analysis, closing taxation loopholes and improving fraud detection mechanisms. However, responsible AI use remains paramount, necessitating the establishment of ethical frameworks, transparency measures and mechanisms for accountability to ensure user data protection and adherence to societal norms and legal standards. By compiling insights from diverse studies, this work presents a unique perspective and paves the way for additional research in this emerging field.

Optimising Eswatini’s Value-Added Tax (VAT) Threshold: Balancing Revenue Efficiency and Compliance Costs

by | Jul 3, 2025 | AMTJ, AMTJ 2025 I1

Optimising Eswatini’s Value-Added Tax (VAT) Threshold: Balancing Revenue Efficiency and Compliance Costs

Authors: Masuku Phindile T; Mamba Lwemvelo

ISSN: 2709-8575
Affiliations: Manager Research – Research, Strategy and Statistics Division at the Eswatini Revenue Service; Senior Analyst – Research, Strategy and Statistics Division at the Eswatini Revenue Service
Source: African Multidisciplinary Tax Journal, Volume 5, Issue 1 (2025), p. 276–295
https://doi.org/10.47348/AMTJ/V5/i1a13

Abstract

Value-added tax (VAT), a consumption tax levied on value added at every stage of production in the value chain, was introduced in Eswatini in April 2012 to replace general sales tax (GST). At its introduction, it was set at a rate of 14%, and since 2012, the VAT registration threshold has been set at E500 000. However, due to inflation and the time value of money, E500 000 in 2012 is no longer the equivalent of E500 000 in 2024, hence the need to review and determine the optimal VAT threshold. This study uses a method based on the idea of collecting the most amount of VAT revenue from the least number of taxpayers to approximate the optimal level of a VAT threshold for Eswatini. This optimal level creates administration and compliance cost-efficiencies for both the tax administration and the taxpayer, respectively. The findings from the study show that the marginal changes to the number of registered taxpayers and the VAT to be collected from them converge at a VAT threshold in the range of E800 000 to E900 000 for Eswatini; at this level, 99% of VAT revenue collected comes from only 54% of VAT-registered taxpayers. Therefore, based on the methodology, the study recommends that the VAT threshold should be revised from E500 000 to E900 000 to allow for the cost-efficient collection of VAT in the country.

The Role of Electronic Tax Stamps System on Revenue Collection in Tanzania

by | Jul 3, 2025 | AMTJ, AMTJ 2025 I1

The Role of Electronic Tax Stamps System on Revenue Collection in Tanzania

Authors: Innocent Nyamfulula; Cornel Joseph; August O. Kessy; Elly H. Mloso

ISSN: 2709-8575
Affiliations: Institute of Tax Administration, Tanzania Revenue Authority; Mkwawa University College of Education, University of Dar es Salaam; Institute of Tax Administration, Tanzania Revenue Authority; Institute of Tax Administration, Tanzania Revenue Authority
Source: African Multidisciplinary Tax Journal, Volume 5, Issue 1 (2025), p. 296–310
https://doi.org/10.47348/AMTJ/V5/i1a14

Abstract

This study examined the Electronic Tax Stamps (ETS) System’s role in revenue collection in Tanzania with a focus on cigarettes, beer and spirits. The results from a trend analysis show an increase in respective revenue in the immediate period after the introduction of the ETS system. Moreover, the estimated results from the regression with Newey-West standard errors show that the coefficient associated with the ETS is positive and statistically significant. Thus, the study concludes that ETS plays a critical role in improving excise revenue performance and fostering a more transparent and efficient fiscal system in Tanzania. The government and policymakers should continuous improvement of the ETS system so that it can contribute significantly to revenue collection. Also, the ETS System should be backed by a well-designed system of enforcement so as to realize a more positive contribution to revenue collection.

Digitalising Tax Compliance and Elevating Revenue Forecasting in Rwanda: Evidence from Statistical Modelling and Machine Learning

by | Jul 3, 2025 | AMTJ, AMTJ 2025 I1

Digitalising Tax Compliance and Elevating Revenue Forecasting in Rwanda: Evidence from Statistical Modelling and Machine Learning

Author: Clement Uwizeye

ISSN: 2709-8575
Affiliations: Wageningen University & Research (WUR)
Source: African Multidisciplinary Tax Journal, Volume 5, Issue 1 (2025), p. 311–330
https://doi.org/10.47348/AMTJ/V5/i1a15

Abstract

This paper explores the dual role of digitalisation and advanced forecasting models in enhancing tax compliance and revenue prediction in Rwanda. It investigates the impact of electronic billing machine (EBM) adoption on tax performance, the comparative accuracy of traditional econometric models (Bayesian VAR) versus machine learning models (NNAR and Ensemble), and the policy implications of these findings. Using data from 2010 to 2023, the analysis reveals that while EBM usage has expanded significantly, its impact on tax revenue is limited due to enforcement and implementation challenges. Regression results indicate that trade openness, financial development and effective governance positively influence tax revenue, whereas corruption and remittance inf lows pose challenges. Forecasting models indicate a moderately optimistic outlook for tax-to-GDP and trade integration, with NNAR outperforming other models in predictive accuracy. The study concludes with key policy recommendations focused on strengthening digital compliance infrastructure, addressing corruption, supporting financial sector development and leveraging machine learning for more accurate fiscal forecasting. These insights are vital for designing evidence-based tax reforms and achieving sustainable domestic resource mobilisation in Rwanda.

Forecasting Tax Revenue Using Arima and Vector Autoregressiive (VAR) Modelling in Tanzania

by | Jul 3, 2025 | AMTJ, AMTJ 2025 I1

Forecasting Tax Revenue Using Arima and Vector Autoregressiive (VAR) Modelling in Tanzania

Author: Masoud Mohammed Al-biman

ISSN: 2709-8575
Affiliations: Lecturer, Institute of Tax Administration (ITA), Dar-es-Salaam, Tanzania
Source: African Multidisciplinary Tax Journal, Volume 5, Issue 1 (2025), p. 331–352
https://doi.org/10.47348/AMTJ/V5/i1a16

Abstract

This article intends to examine whether times series approaches of ARIMA and VAR are effective in forecasting tax revenue. It also compares the two approaches to evaluate which is the more effective forecasting method. Quarterly data from 1996Q1 to 2016Q4 (21 years or 84 observations) are used to forecast the tax revenue for the period 2017Q1 to 2017Q4. Five common types of taxes are selected due to their significant contributions to Tanzania’s total tax revenue collected by the Tanzania Revenue Authority (TRA). Generally, the results reveal that both time series approaches are effective and demonstrate strong predicting power in short-horizon tax revenue forecasting. However, in most cases that the VAR model outperforms ARIMA modelling, especially based on forecasting criteria. However, we suggest that both methods to be applied by the TRA in forecasting tax revenue as their forecasting errors differ only slightly.

Going Concern(ed): Potential Challenges in Sale-of-Business Transactions

by | Jun 16, 2025 | BTCLQ, BTCLQ V16 I2

Going Concern(ed): Potential Challenges in Sale-of-Business Transactions

Author: Siyabonga Nyezi

ISSN: 2219-1585
Affiliations: Attorney of the High Court of South Africa
Source: Business Tax & Company Law Quarterly, Volume 16 Issue 2, 2025, p. 1 – 8

Abstract

One of the fundamental tenets of any sale-of-business transaction is that the business to be transferred must be a going concern, and be transferred as such. Not only is the concept of a going concern given life in the provisions of a sale-of-business agreement, it is also found in various pieces of legislation that apply to the transfer of a business. Examples include the Value-Added Tax Act 89 of 1991, the Labour Relations Act 66 of 1995 and, to some extent, the Companies Act 71 of 2008. Each of these statutes contains provisions where the status of a business as a going concern is a key consideration. As such, one might expect that the term ‘going concern’ ought to be defined in each of these Acts. That assumption would be incorrect, as none of these statutes provide a direct and objective definition of the term ‘going concern’.
This article examines the absence of a definition for ‘going concern’ in South African legislation applicable to the transfer of a business, and the risks arising from the lack of legislative clarity. The article considers the relevant provisions of the aforenamed statues. Absent a legislative definition, the article examines the attempts made by the courts to defi ne the term ‘going concern’ in two cases, namely, Kopeledi (Pty) Ltd v Madontsela and Others (2009) 30 ILJ 158 (LC) and NEHAWU v University of Cape Town (2003) 24 ILJ 95 (CC), and the challenges resulting from those definitions.
Thirdly, the article also explores the approach taken in the International Accounting Standards (IAS), and discusses the challenges also present therein. The article submits that, despite being an internationally accepted set of standards, IAS is not particularly instructive to the present cause.
The article then delves into the potential impact of all these lacunae on sale-of-business transactions, and concludes with an attempt at legislative drafting, proffering a proposal for what a definition of ‘going concern’ might look like.

Rethinking Incentives in Africa Due to Pillar 2

by | Jun 16, 2025 | BTCLQ, BTCLQ V16 I2

Rethinking Incentives in Africa Due to Pillar 2

Author: Esther Geldenhuys

ISSN: 2219-1585
Affiliations: Partner, Bowmans Attorneys
Source: Business Tax & Company Law Quarterly, Volume 16 Issue 2, 2025, p. 9 – 15

Abstract

It is well known that base erosion and profit shifting (BEPS) has adversely affected Africa over the years. If African countries do not participate in Pillar 2 it could again reduce African tax collection. Yet very few African countries have to date implemented or taken some form of measure to implement Pillar 2. This is despite the fact that a significant number of African countries signed either the first or the second joint statement of the OECD/G20 Inclusive Framework on BEPS to implement the two-pillar solution.
Pillar 2 aims to ensure that multinational enterprises within scope pay a minimum of 15% corporate tax in each jurisdiction in which it operates. The ground rules for Pillar 2 are set out in the Organisation for Economic Cooperation and Development Global Anti-Base Erosion Model Rules. These rules provide for three types of top-up taxes, being the income inclusion rule, the undertaxed payment rule (also known as the undertaxed profits rules) and the qualified domestic minimum top-up tax rule (also known as a domestic minimum top-up tax).
The African Tax Administration Forum strongly recommends that African countries immediately enact the qualified domestic minimum top-up tax rule as provided for under Pillar 2, to protect themselves from giving away taxing rights to other jurisdictions applying the top-up tax under Pillar 2 arising from tax incentives. However, not all tax incentives are affected by the GloBE Rules to the same extent. South Africa has various tax incentives and incentive regimes that may lower the effective tax rate to below 15%. This article considers some of these incentives in the context of the GloBE Rules.