Compounding of Offences and the Powers of the Commissioner General in Tax Dispute Settlement: An Appraisal

The effectiveness of tax administration depends on a legal and regulatory framework that promotes fairness, transparency, and efficient dispute resolution. In Tanzania, one mechanism adopted to address tax offences is compounding, which allows the Commissioner General of the Tax Revenue Authority (TRA) to settle offences administratively by imposing fines instead of pursuing prosecution. Compounding enables offenders to settle liabilities without facing trial. However, the legal structure governing compounding raises questions regarding fairness, consistency, and suitability as a genuine form of alternative dispute resolution (ADR). The study employed a qualitative research approach. Is also uses a doctrinal methodology where various sources of legal materials, including Acts, regulations, books, and journal articles, among others, were reviewed, alongside structured interviews with 20 respondents, including TRA officials, legal experts, taxpayers who experienced compounding, and university lecturers in tax law. The findings identified challenges affecting the credibility of compounding as an ADR mechanism, such as the absence of a neutral facilitator, broad discretionary powers of the Commissioner General, lack of clear statutory guidelines, weak institutional capacity, and limited appeal mechanisms. The study recommends legislative and administrative reforms, including clear eligibility criteria, internal review mechanisms, enhanced transparency, and strengthened coordination, to transform compounding into a credible, fair, and effective ADR mechanism within Tanzania’s tax system.