Assessment of causes of delays in processing tax exemption of development partners funded projects a case of road projects implemented by Tanroads

Delays in processing of tax exemptions of road projects that are funded by Development Partners (DPs) in Tanzania is an acute problem. Tax exemptions are granted to reduce tax burden to the projects; to respects government commitment on league agreements; and to implement certain policies. This dissertation aimed at determining causes of delays; impacts of the delays and measures to reduce delays of tax exemption for road projects. Descriptive and diagnostic techniques were adopted to measure the respondent’s attitudes by using Likert - type Scales set on questionnaire. The respondents were targeted to provide information regarding tax exemption process in eight roads projects. Sixteen stakeholders out of twenty eight (57%) responded to the questionnaire and the response showed that there are three significant causes of the delays in granting tax exemptions and five impacts associated to the delays. The delays were due to government bureaucracy in decision making, unspecified time to grant Tax exemption and insufficient number of staff. The associated impacts were found to be delays in reimbursement of contractor’s incurred tax; degradation of the reputation and credibility Government; project cost and time overrun; non-realization of benefits of the projects in time and increase of claims from contractors. The study identified seven measures to facilitate effective tax exemption for road projects. These include formulation of Focal Unit to handle exempted project issues; enhance monitoring and evaluation to reduce tax fraud; reduce bureaucracy by fast tracking tax exemption process; verification and translation exemptible taxes; engage enough number of staff to handle exemptions; and specify time for granting GN for tax exemption.