Africa-Press – Tanzania. THE Court of Appeal has finally dismissed the appeal by Vodacom Tanzania Public Limited Company, formerly Vodacom Tanzania Limited, opposing payments of with- holding tax of over 3bn/- to Tanzania Revenue Authority (TRA) made for acquisition of software licence.
Justices Jacobs Mwambegele, Rehema Kerefu and Issa Maige ruled against the Telecommunication Network and Wireless Services Provider Company after holding grounds of appeal lodged to oppose the findings of the Tax Revenue Appeals Tribunal (Tribunal) lacked merits.
“All grounds of appeal, except the second, are lacking substance; this appeal is, ultimately, wanting in merit.
It is dismissed with costs,” they declared in their judgment delivered recently at the Court’s Registry in the capital city of Dodoma in favour of TRA, the respondent. During the hearing of the appeal, the justices had to determine whether the payment made by the appellant to M/S Siemens Telecommunication (Pty) Ltd for purchase of computer software constituted royalty taxable under section 34 (1) (c) of the Income Tax Act.
Referring to various pre- vious decisions, they held that payment for software and to use the software is a royalty and therefore subject to withholding tax.
The justices noted that the appellant was accorded the right to use the software.
That right, according to the justices, was non-exclu- sive and non-transferable.
It was their view that, it was a hallmark of a royalty subject to withholding tax and the Tribunal was justified to so hold.
“We hold that the pay- ment made by the appellant to M/S Siemens Telecommunication (Pty) Ltd for computer software was in the nature of, and is taxable as, royalty in terms of section 34 (1) (c) of the Act.
The Tribunal rightly so held. We find no legal justification to meddle with its decision,” they ruled.
The appellant had also faulted the Tribunal that it did not strictly interpret a taxing provision, which was con- trary to the cardinal principle governing taxing statutes.
However, having read the judgment of the Tribunal the justices failed to comprehend the appellant’s complaint in this regard.
“As we have stated, the Tribunal well interpreted the statutes under consideration.
We do not see any intendment, presumption, equity or interpolation on the part of the Tribunal.
If anything, the Tribunal looked at the statute as clearly said by the relevant provisions,” they said.
On November 10, 2006, the respondent served on the appellant preliminary audit findings after he had conducted a tax audit earlier on.
A meeting between the parties was convened to con- sider the appellant’s misgiv- ings on the preliminary audit findings after which the re- spondent revised the preliminary audit findings on April 24, 2007.
The revised prelim- inary audit findings did not make the appellant happy.
Another meeting was, thus reconvened and the issues of complaint by the appellant with regard to the revised preliminary audit findings were addressed.
As a result, on December 29, 2007, the respondent issued a final au- dit report, which did not make the appellant happy either.
She thus appealed to the Tax Revenue Appeals Board.
Her main complaint before the Board was that the respondent ought not to have required her to pay withholding tax on pay- ments made for acquisition of software license granted to her exclusively for her data transmission purposes.
The Board disagreed with the appellant. It held that the respondent was entitled to withholding tax for payments she made to her supplier for the software license.
Aggrieved, the appellant appealed to the Tribunal which, though for somewhat different reasons, upheld the decision of the Board.
Having, once again, being ag- grieved with that decision, the appellant decided to take the matter to the Court of Appeal for further adjudication.
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