How online traders outsmart TRA

Richard Kayombo, Director of Education and Taxpayer Services

Local traders have discovered a new way of evading taxes by going online, outsmarting tax collectors who have been struggling in vain for almost a year on the mandatory use of Electronic Fiscal Devices (EFDs) for easy tax collection.

But Tanzania Revenue Authority (TRA) has said it knew nothing of the worldwide online business that is currently flourishing in Tanzania and how much the government is losing through tax evasion by unregistered online businesses. 

“I am not sure how much the government is losing in tax collection from unregistered online businesses; we need to conduct a thorough research on that,” Richard Kayombo, the Director of Education and Taxpayer Services told The Guardian and asked the paper to provide names of traders involved in the business.
"Traders must have licenses for their businesses and issue receipts for any item sold to enable the government collect revenues,” he said, admitting that TRA’s knowledge of online businesses was limited to motor-vehicle and automobile spare parts trade between Tanzania and Japan and several other countries because they are registered and pay tax accordingly.  

Traders in major towns across the country have of late been making big profits through buying and selling products online, thus avoiding expenses like space rentals, ads costs, receipts and scrutiny from tax collectors.

“Through online business I have been able to increase my business turn over making profits of up to 70 per cent every month as opposed to only 30 per ent I used to fetch before going online,” said Judith Moses (not real name), a Dar es Salaam resident who trades wholesale in perfumes, female outfits and handbags, among others, in instagram, facebook, whatsup and twitter via her social networking accounts.

Though the business had initially targeted Smartphone users because of their easy mobility, it has now spread to domestic desktop computer and office laptop users, said Ms Moses with a tone of optimism for brighter future in the trade at the detriment of the traditional store operations.

“Some business people have shops with business licenses and still operate online; and there are also others like me, without space and a business license but selling products online,” she said.

According to her, social networks have been the easiest way of attracting customers through a chain of friends-connection in an account as opposed to shops where one would always wait for clients’ visit.

She said while most of her customers were based in Dar es Salaam with orders being dropped to their doorsteps, upcountry orders were dispatched by buses after the clients had paid through her mobile account.

“All your friends on your social network accounts automatically become your first clientele and you keep on getting more at your liking,” she said, adding, “sometimes social network users in need of your products become the first to include you to their accounts on seeing your products displayed on their friends’ timeline.”

“I may have a hundred friends, each one having fifty friends, advertising my product  in a quick and effective way in a friend-to-friend chain of potential clients,” she said.

 Aisha Mohamed, a resident of Ubungo is one among hundreds of Ms Moses’ potential customers.

She said she usually buys handbags, shoes and dresses via Instagram and gets free delivery services home or to her office through a motorbike.

“I have never received a receipt from purchasing online, nor have I ever asked for it,” she admitted, adding, “people have opened their minds; they see online purchase as cost effective rather than going for shopping at stores in Kariakoo.”

SOURCE: THE GUARDIAN