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UK government to assist Tanzania and Ethiopia in tax collection

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UK’s Developing Countries Capacity Building Unit will help the countries collect more tax as part of new projects to be announced

Tanzanian shillings
Tanzanian shillings, the country's currency

New capacity building projects working with the Tanzanian and Ethiopian governments are to assist them to put in place more effective tax administration and help them collect the taxes which they are owed.

The government’s new tax capacity building programme, the Developing Countries Capacity Building Unit, is to set up the projects working with both countries in partnerships to strengthen their tax administrations. The unit is funded by The Department for International Development (DFID) and run by HMRC.

Through the new programmes HMRC and the Tanzanian and Ethiopian authorities will work together to tailor HMRC best practice to the infrastructure and resources available to help these countries in order to strengthen their tax administrations and bring in the tax that they are due.

The Developing Countries Capacity Building Unit will start work in the summer with the Tanzania Revenue Authority (TRA) and will begin a second phase of HMRC’s successful twinning with Ethiopian Revenue and Customs Authority (ERCA).

Since 2010 there has been an annual 40% increase in revenue collection in Ethiopia, supported by the first phase of HMRC’s partnership with the Ethiopian authorities.

Exchequer Secretary to the Treasury David Gauke will make the announcement at the St Martin’s Tax debate ‘Tax, law and morality, which way now?’ on Tuesday 7 May.

He will say: “This government is committed to building capacity within the governments of developing countries so that they can make changes that will have long-term benefits. One crucial part of this is providing expertise in tax collection.

“Through these projects we will work with the Tanzanian and Ethiopian governments to put in place more effective tax administration and collect the tax which they are owed.”

HMRC tax professionals will work with their Tanzanian and Ethiopia counterparts to look at a range of areas in the administration of their tax in a ‘health check’ of their system – including how the revenue authority is structured, how much tax is collected and what legislation is in place.

The findings of the ‘health check’ will be used to establish where the programmes should focus in order to best strengthen the countries’ tax administration and enable the authorities to bring in the tax due.

This could be in areas such as tax inspector training, improving the revenue authority’s website, developing a complaints handling process, or bringing in a risk management system.

The government confirmed at Budget 2013 funding from DfID for a long-term programme of capacity building by HMRC to support developing countries’ tax and customs administrations through the new Developing Countries Capacity Building Unit.

Prime Minister David Cameron has identified tax, including capacity building in developing countries, as a key priority ahead of the G8 summit, which the UK will chair.

Photo by ebel on Flickr. Used under Creative Commons.

Published 7 May 2013