Impact of Transfer Pricing Audits on Revenue Collection Efficiency in Tanzania’s Large Taxpayer Department

Transfer pricing posed significant risks to domestic revenue mobilization, especially in developing countries like Tanzania, where large taxpayers dominated the fiscal landscape. In response to growing concerns over base erosion and profit shifting by multinational enterprises, the Tanzania Revenue Authority (TRA) introduced the Transfer Pricing Regulations in 2018 to enhance compliance and improve revenue outcomes. This study evaluated the impact of these regulatory audits on tax revenue collection efficiency, particularly focused on total tax revenue and corporate income tax between 2015/16 and 2022/23.

Using a time-series quantitative research design, the study analysed secondary data on revenue collections which were obtained from TRA archives, Statistical analysis involved regression modelling using STATA 17, complemented by Microsoft Excel for data visualization. The regression results shown a statistically significant (p<0.05) increased in both total tax revenue and corporate income tax collections following the implementation of transfer pricing audits. On average, post-2018 revenues increased by TZS 4.77 trillion for total tax and TZS 1.69 trillion for corporate income tax, with adjusted R² values of 0.633 and 0.682 respectively. These findings highlighted the fiscal importance of targeted audits in improving tax administration effectiveness.

The study concluded that transfer pricing audits had a positive and measurable effect on revenue performance in Tanzania. However, sustainable gains required continuous investment in audit capacity, inter-agency coordination, and digital innovations. It recommended strengthening the regulatory framework, increasing technical training for auditors, and enhancing data-sharing mechanisms to ensure long-term compliance and revenue growth