Commissioner General, Tanzania Revenue Authority vs Brac Tanzania Finance Limited (Civil Appeal No. 204 of 2025) [2026] TZCA 596 (21 May 2026)

IN THE COURT OF APPEAL Or TANZANIA AT ARUSHA (CORAM : LILA. J.A.. RUMANYIKA. J.A. And MANSOOR. J.A.^ CIVIL APPEAL NO. 204 OF 2025 COMMISSIONER GENERAL, TANZANIA REVENUE A U TH O R ITY ............................... ................... APPELLANT VERSUS BRAC TANZANIA FINANCE LIMITED............................................RESPONDENT (Appeal from the Judgement and Decree of the Tax Revenue Appeals Tribunal) (Mutunqi. Chairperson.^ Dated the 4th day of July, 2025 in Tax Appeal No. 153 of 2024 JUDGEMENT OF THE COURT 4th December 2025 & 21st May 2026 MANSOOR, J.A.: The appellant, Commissioner General of the Tanzania Revenue Authority "TRA", is a principal officer and an agency of the Government for assessing, collecting and accounting for revenues in the country including receipt of tax revenue. The respondent, BRAC Tanzania Finance Limited, is a private limited liability company regulated by the Bank of Tanzania and licensed by the Bank of Tanzania to undertake the microfinance activities under section 21 of the Microfinance Act of 2018. In the year 2022, the appellant conducted a comprehensive audit on the tax affairs of the respondent covering the year of income 2021 which resulted in a notice of assessment on Excise Duty issued on 16th December 2022. The respondent was dissatisfied with the said assessments and on 13th January 2023 objected the assessed excise duty on the grounds that, the imposition of excise duty was incorrect on the basis that, the respondent is not a financial institution and the microfinance services it provides are not excisable under section 124 (6A) and 128 (f) of the Excise (Management and Tariff) Act. On 12th June 2023, the TRA rejected the objection and confirmed the disputed assessment insisting that, the respondent is a financial institution and accordingly, it is required to charge excise duty. Being dissatisfied with the appellant's objection decision, the respondent successfully appealed in the Tax Revenue Appeals Board, in which it was determined that, the respondent is not a financial institution and it was wrong for the TRA to charge excise duty under section 124 (6A) of the Excise (Management and Tariffs) Act. The decision of the Tax Revenue Appeals Tribunal "the Tribunal" confirmed the position taken by 2 the Board, hence the present appeal. The grounds of the appeal contained in the memorandum of appeal were five, reproduced as hereunder: 1. The Honorable Tax Revenue Appeals Tribunal erred in law in holding that, the Respondent does not qualify as a financial institution liable fo r excise duty under section 124(6A) (a) o f the Excise (Managem ent and Tariff) Act, [CAP. 147 R .E 2023] and consequential Value Added Tax under section 13(1) o f the Value Added Tax, Cap. 148. 2. The Honorable Tax Revenue Appeals Tribunal erred in law by m isinterpreting section 3 o f the Banking and Financial Institutions Act, 2006, in holding that, the Respondent's operations did not m eet the statutory definition o f a "financial in stitu tion " and therefore failed to appreciate that, the Respondent's activities constitute banking or financial business within the m eaning o f the Act. 3. The Honorable Tax Revenue Appeals Tribunal erred in law by failing to properly interpret the definition o f a financial organization provided under section 2 o f the M icrofinance Act. 4. The Honorable Tax Revenue Appeals Tribunal erred in law by failing to construe the M icro finance Act, 2018 in harm ony with the Banking and Financial Institutions Act, 2006, thereby arriving a t an interpretation that created inconsistency between the two statutes contrary to established principles o f statutory interpretation. 5. The Honorable Tribunal also erred in law by treating the distinction between deposit-taking and non-deposit-taking m icrofinance 3 service providers as the determ inative factor in defining a financial institution , contrary to the statutory definition. At the hearing of the appeal, the TRA had the representation of Ms. Grace Makoa, Learned Principal State Attorney assisted by Mr. Andrew Kombo, Ms. Aquila Mrosso and Ms. Adeiina Ngugi, Learned State Attorneys, while the respondent was represented by Mr. Yohannes Konda, Learned Advocate. The hearing was preceded by a detailed written submissions filed by both parties. Submitting in support of the appeal, the appellant insisted that, the respondent is a financial institution and under section 124 (6A) (a) of the Excise (Management and Tariff) Act, Cap 147, excise duty is charged at the rate of 10% on charges and fees payable by a person to a Financial Institution. Ms. Makoa acknowledged that, the Excise (Management and Tariff) Act, did not define a financial institution, but she implored us to borrow a leaf from the definition of a financial institution as defined in section 3 of the Income Tax Act, Cap 332. Under the section, a financial institution is defined to be " a bank or financial institution approved under the Bank o f Tanzania A ct or the Banking and Financial Institution A ct." Ms. Makoa referred to the decision in Sapna Electronics Limited vs Commissioner General, TRA, Civil Appeal No. 120 of 2022 [2025] TZCA 108 (27 February 2025), in which we held that, borrowing a leaf from another tax statute is an acceptable judicial practice and not an uncommon in the conduct of legal proceedings. In section 3 of the Bank of Tanzania Act, Cap 197 (BOT Act), as well as the Banking and Financial Institution Act (BIFA), a financial institution is defined to be "an entity engaged in the business o f banking, but lim ited to a size, locations served, or perm itted activities, as prescribed by the Bank or required by the term s and conditions o f its license." Thus, Ms. Makoa argued that, since the respondent is licensed under the BOT Act to engage in microfinance business, which is a banking activity, indeed, it is a financial institution liable to charge excise duty. Ms. Makoa refers to section 3 of the BOT Act which defines banking activities to mean, "the business o f receiving m oney from the general public through the acceptance o f deposits payable upon dem and or after a fixed period o r after notice, or any other sim ilar operation through the frequent sale o r placem ent o f bonds, certificates, notes or other securities, and to use such funds, in whole or in part, for loans o r investm ents for the account o f and a t the risk o f the person doing such business . " Ms. Makoa argued further that, the respondent is performing the banking activities as permitted by its license, such as frequent sale or 5 placement of bonds, and uses the funds thereof to provide loans to its customers. Ms. Makoa insists that, the respondent is a financial institution as defined by section 3 of the BOT Act, that, the respondent is an institution formed to undertake banking business primarily with households, small holders' farmers and micro enterprises in rural and urban areas of the Tanzania Mainland and Zanzibar. Therefore, a microfinance institution which is a non-deposit institution, is a financial institution because it performs the financial activities described in section 3 of the BOT Act as well as in the BIFA. Ms. Makoa therefore urged us to allow the appeal. Mr. Konda countered the arguments of Ms. Makoa stating that, it is true that, section 124 (6A) of the Excise (Management and Tariff) Act, imposes excise duty on charges and fees payable by a person to a financial institution, and that, the word "financial institution" has not been defined under the Excise (Management and Tariff) Act. Mr. Konda agrees that, section 3 of the BOT Act, and the BIFA, both have defined a financial institution to mean an entity engaging in banking business, and that, section 3 of the BIFA has defined the bank and the banking business to mean the following: "Bank" means an entity that is engaged in the banking business . "Banking business" means, "the business o f receiving funds from the general pu blic through the acceptance o f deposits payable upon dem and or after a fixed period or after a notice, o r any sim ilar operation through the frequent sale or placem ent o f bonds, certificates, notes or other securities, and to use such funds, in whoie or in part, fo r loans o r investm ents fo r the account o f and a t the risk o f the person doing such business." From the above definition, the respondent's counsel argued that, the respondent operates as a financial organization and not as a financial institution. It had been licensed to undertake microfinance business in accordance with the Microfinance Act, and the Microfinance Act defined a financial organization to mean the following: "Financial organization m eans an organization duly incorporated or registered under relevant law s and which is licensed to undertake m icrofinance business in accordance with this A c t " Accordingly, section 4 of the Microfinance Act, defines the microfinance business undertaken under the Microfinance Act to mean the following: a) Receiving money, by way o f deposits or interests on deposits o r borrow ing and which is len t to m em bers or clients; b) Accepting savings and providing loans o r other credit fa cilitie s to m icro o r sm all enterprises and low -incom e households or individuals. Mr. Konda, therefore argues that, since the respondent operates under the Microfinance Act and it is a financial organization, it cannot be categorized as a financial institution under the BOT Act or the BIFA. He thus, argues that, since excise duty is charged on financial institution, the TRA wrongly charged the excise duty on a financial organization which does not carry out the banking activities. He argues further that, the respondent is registered and licensed for tier 2 microfinance business, and although it is licensed by the Bank of Tanzania to carry out the microfinance business, it cannot qualify to be a financial institution as its licensed business falls under the Microfinance Act. That, the Bank of Tanzania regulates the banks as well as other institutions carrying out other financial activities such as SACCOS and Community Micro Finance Groups, and even if the respondent is regulated by the Bank of Tanzania, it still cannot be conferred with a status of a financial institution. Mr. Konda made reference to section 5 of 8 Microfinance Act, which gave categories of the microfinance service providers: it reads: "Categorization o f m icrofinance service providers (1) For the purpose o f this Act, there sh a ll be four tiers o f m icrofinance service providers as follow s: (a) Tier 1, sh a ll com prise o f deposit taking m icro finance service institutions; (b) Tier 2, sh a ll com prise o f non-deposit taking m icrofinance service providers such as individual m oney lenders; (c) Tier 3, sh a ll com prise o f SACCOS; and (d) Tier 4, sh a ll com prise o f com m unity m icrofinance groups. (2) D eposit taking m icrofinance institutions under sub clause 1(a) sh a ll be regulated in accordance with the Banking and Financial Institutions A c t " Mr. Konda argues that, from the preceding section, the Microfinance Act is categorical that, only a deposit taking microfinance institution under Tier 1 is regulated by the Banking and Financial Institution Act, and that, a non-deposit microfinance organization categorized as Tier 2, lacks a legal requirement to be a financial institution under either the BOT Act or the BIFA and it cannot be subjected to pay excise duty under the Excise (Management and Tariff) Act. That, the license issued by the Bank of Tanzania to the respondent is to undertake the microfinance business and not banking business since it is licensed and officially authorized to operate as a non-deposit taking micro finance service provider under Tier 2 . On the definition of the word "financial institution" the respondent's counsel also opposes the principle suggested by the TRA that, it is not uncommon practice to borrow a leaf from other statutes and insisted that, the correct approach for interpretation of tax statutes is the strict interpretation approach, as this approach gives no room to imply something which the law does not expressly address. On this he referred to the case of Commissioner General (TRA) vs Mamujee Products Ltd & Others (Civil Appeal No. 10 of 2018) [2018] TZCA 27 (2 August 2018), and the case of Commissioner General, Tanzania Revenue Authority vs Ecolab East Africa (Tanzania) Limited (Civil Appeal 35 of 2020) [2021] TZCA 283 (2 July 2021). However, despite the opposition on borrowing a leaf, Mr. Konda acknowledges that the word financial institution has not been defined in the charging Act. He argues further that, interpreting it strictly by the type of licence issued, the respondent is a non-deposit taking microfinance organisation, 10 it cannot fall under the interpretation of a financial institution under either the BOT Act or BIFA, as it does not perform banking business. It takes loans from the banks and other financial institutions, and does not receive deposits from the public. Also, the respondent is not regulated by the BIFA as expressly provided under section 5(2) of the Microfinance Act, since it does not carry out the banking businesses. Mr. Konda, thus, argued that, both the Board and the Tribunal below were correct to hold that, the respondent is not a financial institution and does not carry out banking activities and cannot be subjected to payment of excise duty under the Excise (Management and Tariff) Act, as it was not liable to charge excise duty on fees and commission on its clients. He implored us to dismiss the appeal for it lacks merits. Having heard the counsel's oral submissions, as well as the written submissions, and having carefully gone through the entire record of appeal, the issue that requires our determination is whether the Board and the Tribunal below were correct to categorize the respondent as a non-financial institution not liable to charge excise duty under section 124 (6A) of the Excise (Management and Tariffs) Act. Parties in this appeal are in agreement that the Excise (Management and Tariff) Act under which the excise duty was charged to the respondent 11 did not define the word "financial institution". While the TRA argues that, the definition of the word "financial institution" be borrowed from the Income Tax Act, the respondent insists on strict interpretation of the tax statute. On whether we should borrow a leaf from the Income Tax Act on the definition of the word "financial institution", while we agree with the submission of Mr. Konda that, in interpretation of tax statutes , one has to look at what is clearly stated in the statute as there is no room for intendment to a tax and there is no equity or presumption to a tax , and nothing is to be implied, as stated in Commissioner General vs Mamujee Products & Others (supra) and the case of Commissioner General, TRA vs Ecolab East Africa (Tanzania) Limited (supra), where the English Case of Cape Brandy Syndicate vs Inland Revenue Commissioner (1921) 1 KB 64 was quoted with approval, in the traditional principle of strict interpretation of tax statutes, in which it was held that: "In a taxing A ct , one has to look m erely a t what is clearly said. There is no room fo r any intendm ent. There is no equity about a tax. There is no presum ption as to a tax. Nothing is to be read in, nothing is to be im plied. One can only look fa irly a t the language used." We, however noted as submitted by both counsel that there is no definition of the financial institution in the charging Act, and the strict interpretation of the word financial institution suggested by Mr Konda would be irrelevant. We therefore subscribed to the developed jurisprudence in Sapna Electronics Limited (supra), that, taking inspiration of a certain position on similar circumstances is part of judicial practice and it is not an uncommon practice in the conduct of legal proceedings. In the present case, since the word "financial institution" is not defined at all in the Excise (Management and Tariff) Act, it is quite appropriate to borrow a leaf from a tax statute in which the phrase was interpreted. It is common practice for courts to interpret tax laws by borrowing definitions from related statutes to ensure consistency and to ensure that a term used in one statute is interpreted consistently with another dealing with the same subject within the context of administration of tax statutes. We thus, agree that, since the Excise (Management and Tariff) Act did not define the word "financial institution", it is quite appropriate to borrow leaf from the Income Tax Act, in which the word "financial institution was interpreted to mean" a bank or financial institution approved under the Bank o f Tanzania A ct or the Banking and Financial Institution Act." 13 Secondly, since we agreed that, the definition of the word "financial institution" is as defined by the Income Tax Act, the starting point would be section 3 of the Income Tax Act, which defines the Financial Institution to mean the following: "Financial institution" m eans a bank o r financial institution approved under the Bank o f Tanzania A ct o r the Banking and Financial Institutions Act; It is therefore not in dispute that, the respondent is approved by the Bank of Tanzania to carry out microfinance businesses as licensed under the Microfinance Act. Again, the BOT Act has defined the Financial Institution to mean the following: "Financial institution" m eans an entity engaged in the business o f banking but lim ited as to size, locations served, o r perm itted activities, as prescribed by the Bank o r required by the term s and conditions o f its licence; The BOT Act has also defined what is the banking business, it says: "banking business" m eans the business o f receiving funds from the general public through the acceptance o f deposits payable upon dem and or after a fixed period or after notice, or any sim ilar operation through the frequent sale or placem ent o f bonds, certificates, notes or other securities, and to use the funds, in whole o r in p art fo r loans o r investm ents fo r the account o f and a t the risk o f the person doing the business; The issue here is whether the respondent is a financial institution under the definition of the BOT Act, as a financial institution under the BOT Act are those institutions carrying out the banking business. The banking business under the BOT Act includes the following: a). the business o f receiving funds from the general public through acceptance o f deposits; b). sim ilar operation through the frequent sale or placem ent o f bonds, certificates, notes or other securities and to use the funds, in whole or in p art fo r loans o r investm ents fo r the account o f and a t the risk o f the person doing business. It is clear that, the respondent falls under category (b) above of the banking business, since as submitted by Mr. Konda, section 4 of the Microfinance Act, under which the respondent has been licenced to trade, defines micro finance business undertaken under the Microfinance Act to mean receiving money by way of deposits or interests on deposits or borrowing and which is lent to its members or clients, as well as accepting savings and providing loans or other credit facilities to micro or small enterprises and low income households or individuals. The business of the respondent under the Microfinance Act is not deposit taking banking institution but undertakes the business of borrowing and which is lent to its members or customers as well as providing loans and other credits to micro or low-income household and individuals, which falls under part (b) of the definition of the banking business under section 3 of the BOT Act. Further, as submitted by Mr. Konda that, the respondent either takes loans or places bonds and securities and using the funds thereof in whole or in part for lending to its members or clients in micro basis or to small households and to individuals for a consideration of interests. Thus, under the BOT Act, the respondent falls under the definition of the Financial Institution engaging in the business of banking on micro basis and to small households or individuals. The arguments of Mr. Konda that, since the respondent is a Tier 2 non-deposit micro finance and that it is not regulated by BIFA, does not make the respondent a non-financial 16 institution. We don't agree to the position suggested by Mr. Konda and the position taken by the Board as well as the Tribunal below, instead we subscribe to the position taken by the Court in Commissioner General Tanzania Revenue Authority vs Brae Tanzania Finance Limited (Civil Appeal No. 203 of 2025) [2026] TZCA 33 (5 February 2026) that, institutions engaging in financial services such as lending and charging fees are financial institutions subject to excise duty even if they are not traditional banks. We thus said: " 7/7 any case, it is evident that the legislature's intention to distinguish between deposit taking and non deposit taking d id not render the respondent ineligible to be classified as a financial institution. Consequently, we would deduce that the respondent is classified as a financial institution with regard to excise duty." We also insist that, a microfinance institution, including non-deposit- taking entities, are "financial institutions" liable for excise duty, and distinction between a deposit taking or non-deposit taking and whether it is referred as an organisation in the Microfinance Act does not render it ineligible to be classified as a financial institution. As we emphasised in the above cited case, tax liability is determined by business activity rather than how it was categorised in the Microfinance Act. Consequently, flowing from the above, the appeal is meritorious, and we hold that the respondent is a financial institution and its activities constitute the activities of a financial institution, thus, liable for excise duty under section 124 (6A) of the Excise (Management and Tariff) Act, and consequential Value Added Tax under section 13 (1) of the Value Added Tax, Cap 148. Consequently, the appeal is allowed with costs. DATED at DODOMA this 19th day of May 2026. S. A. LILA JUSTICE OF APPEAL S. M. RUMANYIKA JUSTICE OF APPEAL L. A. MANSOOR JUSTICE OF APPEAL Judgment delivered via teleconferencing, this 21st day of May, 2026 in the presence of Mr. Hospis Maswanyia, Principal State Attorney for the Appellant, Mr. Yohanes Konda, learned counsel for the respondent and Mr. John Gelvas, Court clerk, present in court is hereby certified as a true 18