Speculation is rising over the abrupt removal of Tanzania Revenue Authority (TRA) Commissioner General Alphayo Kidata earlier this week against a backdrop of discontent among foreign investors and domestic traders over questionable taxation practices.

President Samia Suluhu Hassan on Tuesday named Zanzibar revenue chief Yusuph Juma Mwenda as the new TRA boss in place of Mr Kidata who had held the position since April 2021, moving him to an unspecified advisory role in State House.

Mr Kidata was in his second stint as the head taxman and his latest transfer came as the government prepared for discussions with members of the diplomatic corps to address a raft of complaints they raised last week about allegedly unfair taxation of foreign direct investments (FDIs) in Tanzania.

Although there has been an argument that the 60-year-old Kidata (born December 28, 1963) was already past public service retirement age, the timing of the move also coincided with a second strike within a year by local market traders protesting long-running harassment by TRA officials and agents.

Curiosity was further piqued by State House Chief Secretary Moses Kusiluka's announcement, in the same July 2 brief, of a replacement for Industries and Trade Minister Ashatu Kijaji who was part of the government team involved in protracted talks with the traders last week.

Dr Kijaji moved to the Vice President's Office as Minister of State responsible for Union and environmental affairs, exchanging portfolios with Selemani Jafo. No reasons were given for any of the new appointments.

Earlier on June 26, Tanzania-based ambassadors and high commissioners from 10 countries lodged a formal request to Foreign Affairs Minister January Makamba for a meeting to address "recent and ongoing challenges" faced by foreign investors in relation to TRA tax administration.

The envoys who signed the request letter, a copy of which was obtained by The EastAfrican, were from the United States, Canada, Britain, Ireland, Germany, France, Belgium, the Netherlands, Sweden and South Korea.

They cited, among other things, "unevidenced" TRA notices demanding payments and account reconciliations dating back up to 15 years, extraordinary tax bills not supported by law, and TRA's rejection of tax concession agreements with the Tanzania Investment Centre (TIC)- another state agency - on the grounds that they had not been "gazetted."

“Investors also report that TRA agents threaten investors and Tanzanian partners when companies protest or appeal these practices, and freeze or seize bank accounts and company assets without notification nor timely legal recourse,” the envoys' letter stated.

According to them, TIC's success in raising the value of FDI registrations from $3 million in 2021 to $5.5 million in 2022 had become "undermined" by the trend. They said despite undergoing regular audits by TRA and state-endorsed international audit firms, some investor companies were "now receiving notices with additional demands for tax payment."

The envoys cited an instance where one unnamed company was issued with a Tsh1.2 billion ($455,400) tax notice requiring it to pay up "within three working days for discrepancies dating back 12 years, under the threat of having its operational accounts frozen and funds withdrawn."

Mr Makamba responded through official correspondence the following day (June 27), pledging to convene a roundtable of the envoys, relevant government officials and representatives of aggrieved investors to address the concerns head-on, although he did not immediately specify a date.

He said for the meeting to be productive, the investors being referred to should prepare a compendium or presentation detailing their grievances, adding that "the sooner this report is presented to us, the sooner we will be able to schedule the requested meeting."

The minister asserted that Tanzania was committed to protecting and ensuring the "ironclad" success of all FDIs and the government would "take very seriously any alleged transgression, by any public entity, that endangers the country's reputation as an investor-friendly destination."

Traders chat outside their closed shops in Kariakoo Market, Dar es Salaam during a strike over taxes on June 25, 2024. PHOTO | THE CITIZEN | NMG

Last week's strike by traders in Dar es Salaam and other urban markets revolved around long-standing demands for a more transparent tax system in the face of constant badgering by TRA compliance inspectors.

The traders' concerns had remained unresolved since a previous strike at the major Kariakoo market in Dar es Salaam in May last year. This time around, the government managed to cool things down with tentative promises of quick solutions in a series of talks with traders’ representatives in the administrative capital Dodoma.

Read: In Tanzania, traders strike over harassment

As part of the solutions package, TRA was instructed to set up a more efficient system involving proper documentation of receipts and invoices for traders to be assessed more accurately on what they owe in taxes at any given time and have the system operational by July 1.

Key government officials involved in the talks included Prime Minister Kassim Majaliwa, Finance Minister Mwigulu Nchemba, Minister of State in the President’s Office for Planning and Investment Prof Kitila Mkumbo, and Dr Kijaji while still holding the industries and trade docket.

On their part, the foreign envoys have requested the attendance of the same cabinet ministers along with Mr Makamba and the TRA commissioner general at their own upcoming meeting.

Mr Kidata has a somewhat chequered history in the civil service, especially during the tenure of ex-president John Magufuli when he experienced several ups and downs and much shifting around.

He was TRA boss under Magufuli from January 2016 to March 2017 before being appointed permanent secretary in the Ministry of Regional Administration and Local Governments at State House. Shortly afterwards he was sent to Canada as Tanzania's envoy, only to be recalled within 10 months, in November 2018, and stripped of his ambassadorial status in circumstances that were never made public.

Again a short time later, in September 2019, the late president appeared to have another change of heart and appointed Kidata to the relatively junior position of Mtwara regional administrative secretary. He was serving in that capacity when Samia, having succeeded Magufuli following his demise, reinstated him to the TRA pilot seat in the early weeks of her presidency.

Under his second watch at the revenue agency, Kidata presided over a steady rise in monthly tax collections that have not dipped below Tsh2 trillion ($784,300) since August last year, hitting an all-time high of Tsh3.05 trillion ($1.19 million) in December 2023. 

Annual tax revenues went up 30 percent from Tsh18 trillion ($7.05 million) in 2020/21 - the last year of Magufuli's tenure - to Tsh24 trillion ($9.41 million) by the end of the financial year 2022/23.

In Tanzania's latest budget, TRA has been given a new collection target of Tsh29.41 trillion ($11.31 billion) for the 2024/25 fiscal year as the country aims to cover more than two-thirds (67.4 percent) of its Tsh49.35 trillion ($18.98 billion) expenditure plan through domestic financing.