How Not to Report Telco Tax Compliance

Three incidents happened in my early life that changed the way I view journalism. The first one was a very proud moment. I attended an agricultural show and the following day I read about the show in the newspaper. I could not believe it. For a young boy in central Kenya, seeing an event that I had attended in a national newspaper made me want to be part of this greatness. I swore to myself that I would be a journalist. I could not resist the lure of attending big events anywhere in the country and bringing them to a wide audience – there was magic in that.

A couple of years later, there was a demonstration in my primary school. Factions of parents and teachers were wrangling over the control of the school. One faction hired journalists. The journalists came to the school and interviewed pupils. However, I knew the pupils had been coached by the faction leaders and they lied about many things. I knew the truth, because I had been approached by the merchants of lies and when I refused, I was dropped from the list of pupils to be interviewed. When I read the article a couple of days later, my respect for journalists went down a few notches. They just published the falsehoods verbatim. It seems fake news and brown envelope journalism has always been with us.

Much later, as a teenager, I attended a campaign rally. I do not recall exactly what transpired but towards the end of the rally, the crowd surged forward and attacked two photojournalists. The scribes were beaten to a pulp and their shiny cameras were crushed. Suddenly, the idea of becoming a journalist was not so appealing. I did not particularly fancy a job where goons might descend upon me and beat me to within an inch of my life. From that point, my choices took a trajectory that ended with a career in revenue assurance.

The closest I have come to being a journalist is writing for Commsrisk and this platform has given me a good opportunity to interrogate the media. My past experience of journalists still haunts me. A recent spasm of anxiety was prompted by this sensationalized story about the Tanzanian Revenue Authority (TRA) and Tanzanian Communications Regulatory Authority (TCRA) not being able to reconcile the collection of telco taxes. The article specifically refers to the issue of differences between TCRA’s Telecommunication Revenue Assurance System (TRAS) and TRA’s electronic Revenue Collection System (eRCS).

Whenever TRAS was not used, revenue amounts from telecommunications service providers were not objectively verified… there [is a] contradiction between TRAS and electronic Revenue Collection System (eRCS)

There are two points that this news article misses and I would expect a journalist to ask:

  • Why are there differences between systems that get the same data feed from operators?
  • Does the failure of the two clueless government agencies imply the operators are engaging in tax evasion?

The article goes on:

TRA did not effectively use eRCS to verify the tax. In the financial year 2018/19 there was no confirmation that TZS 681.33bn [USD290mn] was verified through eRCS.

Fair enough. However, who should be answerable for this? If I were a journalist writing this, I would definitely want to hear what TRA and TCRA have to say for themselves. In fact, I would also want to know how much these systems cost the taxpayers. Instead, the journalist harps about the differences whilst taking quotes from this report by Tanzania’s Controller and Auditor General (CAG).

Because of the aforesaid situation, the process of verifying tax returns submitted by the TSPs (telcos) was difficult to identify true information. Up to the time of writing this audit report, there was no reconciliation after comparing the two systems.

This is a report covering last financial year. I would imagine a journalist should get off his butt and find out if the mess has been fixed. If it has not, that would be news. Actually I am getting ahead of myself – in the case of Tanzania, if it has been fixed, that would be news.

The CAG reports (and the journalist excerpted):

The effects of the tax audit are very positive. In one of conducted tax audits, to one TSP, TRA was able to identify TZS 208 Bn [USD90mn] as a variance between VAT returns submitted and actual taxes paid.

Anybody who has read the CAG’s report would know this journalist is only repeating what the report says, without doing any further research. I have already covered this report for Commsrisk here and it is a struggle to understand why somebody like myself has to do work that a professional journalist is unwilling to do. If the journalist had bothered to do a bit more research, he would know that the Tanzania High Court Commercial Division is inundated by cases of TSPs disputing some of those tax assessments. However, that would require doing some journalism, something this particular journalist clearly does not like doing.

Lastly, our good scribe fails to even query the CAG’s conclusion. The CAG said:

The findings presented in this report endorse that, there were still some loopholes that would lead to loss of government revenue from the existing telecommunication companies. [Both TRA and TCRA] have not worked together to ensure revenues from telcos are effectively being collected.

Why fix the mess when you can arrest telco employees, throw them behind bars and extract substantial fines in order to let them go, as has been the case in Tanzania? It is so much easier than having to do actual work. The journalist is unable to see this thread. Yet, it is the same half-baked approach to tax compliance that our journalist has towards his work.

It is bad enough to have TRA and TCRA unable to carry out their tasks.

It is odious that the CAG is unable to call out the deficiencies of these two agencies.

It is tragic that the media will not fault the CAG, TRA and TCRA for being ineffective.

Three strikes for Tanzania.

Joseph Nderitu
Joseph Nderitu
Joseph Nderitu is a director at Integrated Risk Services Ltd and specializes in revenue assurance. He previously worked as Head of Revenue Assurance and Fraud Management at Vodacom's operation in Tanzania, having previously served in the same role at Vodacom Mozambique.

Before his work with Vodacom, Joseph was an internal audit manager for Airtel, with responsibility that covered their 17 countries in Africa. Whilst at Airtel, Joseph led reviews of the Revenue Assurance, Customer Service and Sales & Marketing functions.

Prior to his stint at Airtel, Joseph was an RA manager at Safaricom in Kenya. He holds an MSc Degree in Information Systems.