CAG: Over 88 percent of Tanzanian traders not using EFD machines

In the document, the Auditor General compared EFD users and business TINs, providing an audit report showing that as of July 2024, “1,813,385 out of 2,056,723 traders, equivalent to 88 percent, were not registered to use EFDs.”

The Tanzania Revenue Authority (TRA) management argued that EFD is not mandatory for all traders, citing exemptions based on turnover and business nature. However, the audit team flagged a key system weakness:

“The existing system did not indicate whether registered traders were eligible for EFD registration even without considering the traders' threshold,” reads part of the report.

A tax policy analyst, Ms Neema Buberwa, said the gap raises concerns about the government’s ability to monitor compliance effectively.

“When you cannot even tell which traders qualify or are exempt, enforcement becomes guesswork,” she told The Citizen.

The audit found that while TRA set increasingly ambitious targets for EFD acquisition, rising from 35,691 in FY2020/21 to 100,410 in FY2023/24, actual performance sharply declined.

In FY2023/24, only 45,761 EFDs were registered, resulting in a performance rate of “46 percent—the lowest in the period under review,” the audit notes.

In contrast, TRA had achieved 101 percent in FY2020/21 and maintained 88–89 percent in the subsequent years. This significant drop was attributed to a mixture of operational and strategic failures.

“The country is still facing low compliance with tax laws and regulations, and registration and usage of EFDs often necessitate door-to-door enforcement activities to engage taxpayers and enforce compliance effectively,” reads the CAG report.

TRA also cited a fallout with traders as one cause for reduced field enforcement: “These enforcement activities were suspended due to a recent dispute between traders and TRA,” says part of the report.

The report revealed a mixed performance in different tax regions. While Arusha maintained a consistent trend between 87 percent and 97 percent achievement, Kariakoo’s performance slumped to just 39 percent in FY2023/24.

In some cases, target-setting was also flawed. In Kinondoni, despite a growth in EFD acquisitions from 5,116 in 2020/21 to 7,002 in 2022/23, the target for 2023/24 was reduced by 15 percent.

“This indicates that the estimation process was not accurately conducted,” states the CAG.

Tax consultant Joseph Mrema said poor target-setting undermines tax administration: “When your targets are lower than the market potential, you not only lose revenue but also miss the chance to bring more traders into the formal economy.”

In Kariakoo, 955 potential taxpayers were identified, but actual acquisition reached 3,190.

“The noted discrepancy… indicates that the identification process was not properly conducted,” said the report.

The CAG also found that of the 6 to 13 strategies designed to improve EFD administration, only 1 to 5 were implemented annually.

This low implementation rate was “attributed to the absence of annual operation/action plans and Key Performance Indicators (KPIs).”

Additionally, the audit highlighted unequal workloads. In Kinondoni, each officer managed an average of 30,702 traders and 6,070 active EFD users.

Meanwhile, in Rukwa, each staff member handled just 1,186 users.

“These disparities indicate that tax regions like Kinondoni and Arusha were under-resourced relative to their trader and EFD user bases,” the report states.

TRA admitted to staffing constraints: “The Authority is currently experiencing a general shortage of staff across all sections, especially in our regions, including EFD units,” they said, though the CAG noted the lack of a record quantifying this shortage or a standard for the number of staff required per EFD user.

Perhaps most damning is the lack of integration in TRA’s information systems.

The audit found that Regulation 34(1) of the Tax Administration (General) Regulations, 2016—which mandates the Commissioner General to maintain an integrated EFD Management System—was not fully complied with.

“TRA's information system did not specify which traders with TINs were not registered for EFDs, nor did it clarify their eligibility for EFD registration based on exemptions or sales thresholds,” the report states.

As a result, in 2023 alone, “24,601 traders with sales turnovers exceeding Sh11 million were not EFD users,” and the system could not assess their eligibility.

Experts and auditors agree that unless systemic weaknesses are addressed, Tanzania risks missing out on crucial domestic revenues.

Ms Buberwa cautioned: “Without reliable data, adequate staff, and strategic enforcement, we’re leaving billions of shillings on the table—money that could improve health, education, and infrastructure.”