Revenue authority attaches IPTL accounts

Dodoma/Dar es Salaam. 

The Tanzania Revenue Authority (TRA) has attached bank accounts belonging to Independent Power Tanzania Limited(IPTL) in its bid to recover unpaid tax amounting to Sh26 billion, The Citizen has learnt.

Recently, The Citizen reported that during the transaction between IPTL and Pan Africa Power Solutions Tanzania Limited (PAP), which culminated to the release of $122million Escrow money by the Bank of Tanzania (BoT), value added tax wasn’t paid as per the law.

PAP is the company that claims to have purchased IPTL.

All capacity charges paid by Tanzania Electric Supply Company (Tanesco) to independent power producers (IPPs) is subject to 18 per cent Value Added Tax.

Reports obtained by The Citizen from Dodoma show that TRA has taken the move after waiting in vain for nearly four months without getting any VAT payments from IPTL.

Speaking to The Citizen yesterday, the Public Accounts Committee Chairman, Mr Zitto Kabwe confirmed the move. He told The Citizen: “TRA Acting Commissioner General, Mr Rished Bade, briefed the Public Accounts Committee on Sunday in Dodoma that the agency has attached IPTL accounts due to tax liabilities.”

“We asked him about the measures taken by TRA to recover the Sh26billion, which were supposed to be paid as VAT in Escrow money released to PAP…You remember that one of the terms of references(ToR) in an investigation ordered by PAC was on VAT.” Mr Kabwe told The Citizen.

The TRA’s Director of Education and Taxpayer Service Mr Richard Kayombo confirmed to The Citizen on Monday that IPTL owes TRA, but declined to disclose further details.

“We are prohibited by the law to give detailed information of any taxpayer being investigated…But it is true that IPTL owes the Authority certain amounts of tax,” said Mr Kayombo.

The Citizen has learnt that last year before the then TRA’s Commissioner General, Mr Harry Kitilya, retired, he wrote to the Central Bank of Tanzania asking the bank to deduct VAT on $122 million, which were in Escrow account.

But, it wasn’t clear why the VAT money wasn’t deducted as requested by TRA during the process to pay PAP.

The Citizen couldn’t independently verify why TRA decided to attach IPTL bank accounts instead of PAP, which was actually the company that got paid the Escrow money.

On November 28, last year, PAP wrote a letter to the BoT governor instructing that the Escrow money, which were in forms of cash $22million, Sh8billion and treasury bills be paid to the company’s accounts at Stanbic bank.

However, the letter used IPTL headed paper, according to details gathered by The Citizen.

“Please refer to your letter dated 25th November, 2013 Ref: No:NC.53/135/068/11/14 and the meeting held at your office…please transfer the sum of USD 22,198,544.60 to our account of PAN AFRICA POWER SOLUTIONS (T)LTD, c/o IPTL” read part of the letter wrote by PAP to Bank of Tanzania.

The Citizen: