AGREEMENT

between

THE GOVERNMENT OF THE KINGDOM OF NORWAY

and

THE GOVERNMENT OF THE REPUBLIC OF TANZANIA

regarding

Technical Cooperation between the Ministry of Finance, Tanzania

Revenue Forecasting, Tax Policy and Legal Drafting

of the Ministry of Finance, Tanzania

WHEREAS the Government of the Kingdom of Norway ("NQrway") and theGov~rnment of the United Republic of Tanzania ("Tanzania"), have entered into anagreement regarding Cooperation for Prornoting of the Economic and SocialDevelopment of the Republic of Tanzania, dated 13 June 1988 and prolonged byAddenda dated 22 August1995, 20 October 1995, 3 July 1996,30 June 1997, 12December 1997 and 27 May 1998, 6 December 1999,10 January 2001 and 21 May-20Q2 ("the Main Agreement'i), and with reference to the provisions therein relating toSpecific Agreements;

~~ASNorway and Tanzania have signed a Memorandum ofUnderstandingIegar~gnevelopment Cooperation dated 4 June 2002;

~~AS Tanzania has requested Norway for support to a technical cooperation instren~eWiig Revenue Forecasting, Tax Policy and Legal Drafting of the Ministry ofFiiiaiiceT a:i1Zama ., 'c ,

,p~AS

Norway has decided to comply with the request;.

NOWTHEREFORE Norway and Tanzania have reached the following understandingwhich s~a11 constitute a Specific Agreement as mentioned above:

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Article IScope and Objectives

~ This Agreement sets forth the temlS and procedures for Norway's assistance tothe technical cooperation between the Ministry ofFinance, Tanzania ("MOF-TAN") and the Ministry ofFinance, Norway ("MOF-NOR") to strengthen theRevenue Forecasting, Tax Policy and Legal Drafting ofMOF-TAN as outlinedin Annex I to this Agreement ("the Programme").

The Programme is further outlined in the Programme DocumentJtheProgramme Proposal dated 22 October 2003.

2,

The Goal of the Programme is to strengthen the capacity and competence ofMOF-TAN, especia1ly in the areas oftax policy and tax legislation.

3,

Key Objectives of the Programme are

Strengthen management, the methodology of research, policy developmentand legal drafting;Raise comfort level of economists with numbers and presentational skills(verbal and written);Develop stronger institutionallinks be:tween MOF-TAN, TanzaniaRevenue Authority ("TRA") and Attomey General Chambers;Promote development of analytical databases at the TRA for Joint Policy.Analysis MOF-TAN and TRA use;Promote the development of databases of all Government Notices andother tax-related legal instruments;Promote greater awareness ofsubstantive tax policy issues in LegalServices Department at TRA. ,

Article nInformation -Representation -Administration

1.

NQ~ay and Tanzania shall co-operate fuIly to ensure that the Goal andObjectives of the Programmeare successfully accomplished. To that effect eachParty shall furnish the other Party with all such information as may reasonablybe required pertaining to the Programme.

2. hl matters pertaining to the implementation ofthis Agreement the NorwegianAgency for Development Cooperation ("NORAD") and MOF- TAN shall be

"competent to represent Norway and Tanzania respectively.

3 MOF -TAN shall through the Policy and Analysis Department ("P AD") have theoverall responsibility for the implementation of the Programme.

All communication to Norway in regard to this Agreement shall be directed tothe Royal Norwegian Embassy in Dar es Salaam.

b-

Tanzania shall enter into the following contract for the implementation of theProgramme:

4.

a contract with MOF-NORregarding the technical cooperation onstrengthening Revenue Forecasting, Tax Policy and Legal Drafting ofMOF-TAN ("the Contract").

The Contract and any subsequent amendments thereof shall be approved byNorway before entering into force.

Representatives of Norway and Tanzania shall meet annually in May each yearin order to:

5

Review the pro gress of the Programme;discuss possible revisions of plans and budgets for the Programme;approve work plans and budget for the next year;discuss issues of special conc~m for the jmplementation of the Programme.

Thedocumentation specified in Article VII, Clause 2 and 3 below, shall formthe basis for the Annual Meeting.

!ri addition an Inception Meeting shall be h-eld 6 months after commencement offue,Programme in line with the annua! meetings above.

c,

The Annua! Meeting and the Inception Meeting shall be called and chaired by-

MQF-TAN.

MQf-NOR shall be invited to the Annual Meeting and the Inception Meeting.~~~o Parties may in addition include others to be represented as advisors to

..,

tA~~d~legation.C",,",

Central elements for the discussions and all decisions from the consultations., ,," Cc .,

~p~llc~~recorded in Agreed Minutes. The Agreed Minutes shall be drafted byMOF-TAN and shall be sent to Norway not later than 7 days after the Annual

.,

M~~~~ception Meeting.

Article illContributions of Norway

.Norway shall subject to Parliamentary appropriations, on the terms and proceduressetputor referred in this Agreement, provide a grant not exceeding NOK14;800,000 (Norwegian Kroner Fourteen Million eight hundred thousand) ("theGrant") for assistance to the twinning arrangement between MOF-NOR and MOF-TAN for the planned period 2003 -2006.

2. Any accrued interest on the Grant may be used for the benefit of the Programme.

b

3 Any funds not fully utilized for one activity may upon written agreement betweenthe Parties be utilized for the benefit of other activities within the Programme.

4. Any unspent disburs~d funds shall be retumed to Norway upon the completion ofthe Programme unless otherwise agreed upon.

..Article IVContributions and Obligations of Tanzania

]anzailia shall make all reasonable efforts to facilitate the successful implementationof theProgramme, and shall hereunder:

11 have the overall responsibility for the planning, administration andimplementation of the Programme;

5, ensure that the Grant is reflected in the plans, budgets and accounts of Tanzania,and that accounts for the Programme are kepi in accordance with generallyaccepted accounting practices. The accounts shall include accrued interest, ifany;

6. provide sufficient qualified local personneI and all financial and other resourcesthatmay be required over and above the Grant for the successfuliinplementation of the Programme;

7.

8,

"Uridertakeall such obligations as set out in Article VI and Annex ill in the Main.,..

A~eement with regard to consultants financed by the Grant;

.defray~ycustoms duties, sales tax;es and other taxes, fees and leVles on all.,c- ,eqWpm~t,materials and supplies financed by the Grant and imported intoI~#at:or~ebenefitof the Programme;

9~ ~åhf'å1(necess'f1r'J peimits, import licences and foreign exchange permissions,t~~!w~ayb,~ req*ed in connection withthe implementation of the Programme;":c,,' ;

7~ p~2mpQYWfo~Norway of auy condition which interferes or tbreatens tocC",-c" c, ..cc;wt~!f~f~;.mfu~e§}!~cessfu1

iIIiplementation of the Programme;""C""t,,;'i"';""i,';' ,'!;;c"""'."c",,,' + 'c

sj, ,--e,c" C , ,

p~~~r@te~~tatives of Norway to visit any part of Tanzania for purposes" "C"'-"C"'-'c' "

{~l~t~~j~~-~~,Aw:e~~nt~dex~e anyrelevant records, goods and"

9~,C"C-"""," ; """C"":c,!",,,; _C," ,

dotheirutrii6sfthatpetsonnel tråined through the Programme remain in MOF-

II

Article VDisbursement

Tanzania shall submit semi-annua! written requests for disbursements from thegrant. The first request will be submitted upon the signing of this Agreement.

11

Subsequent requests shall be based on and relate to approved work plans andbudgets. They shall be accompanied by certified statement of accounts showingexpenditure for the foregoing period and a cash flow budget for the comingperiod. Any amount, including interest if any, which is already disbursed but notfully utililised shall be taken into account when requests are made. Bachinstalment from Norway will cover the expenditure for a maximum of sixmonthS.

The certification of the accounts shall be done by the Accountant General

2, Transfer of the funds to the Programme account will be undertaken uponNorway's approval of the request to a separate forex account ofMOF-TAN andbe_available for the Programme im:mediately. .

Tanzania sha11 immediately, in writing, ackllowledge receipt of the funds.

3 Norwayshall effect disbursement direct to MOF-NOR for costs incurred underthe ~ontract. The first invoice wiIl cover the period starting from November 1,

, -:2003 to cover costs related to final Programme preparation. Such disbursementwil,' only be made against receipt ofwritten requests accompanied by i.a.:

invoice in original and copies ofvouchers;written approvals of the invoices by MOF-TAN

Article VI

Reports

1 Tanzatiia shall submit to Norway a progress report no later than 3 weeks beforefue mception Meeting to be held within October 2004.

2.

t~aniashall thereafter every year no later than 3 weeks before the Annual~eeting submit to Norway an Annua! Report on the implementation of theprogramme. A foflllat for the Annua! Report is given in Annex il hereto.

The Annual report shall include

Pro gress report, giving information on actual outputs compared to plannedoutputs, work plans, use of inputs, problems encountered or foreseen andother information related to the implementation.

"gf1!

i"Ij

Programme accounts related to the agreed budget, specifying allexpenditures.

The report will raise any issues wbich may require clarification and make anyrecommendations that may be necessary for further improvements inProgramme execution.

As a preparation for the Annua! Meeting mentioned in Article il, Clause 5,above, Tanzania sha!l within 3 weeks of the Annua! Meeting submit toNorway:

~k1fgget ,for the next year of the Programme, showing all income and~~p~#9itures;

!4ese"documents together with the Annua! Report and the audit opinion sha!lpro'VideCthe basis for the discussions and decisions in the consultations.

T~~a shall submit to Norway an ~udit opinion on the Project accountsnot,later than 6 months after each financial year.,

The audit shall be perfonned by the Controller and Auditor General and th~,

audit opinion shall certify:

the principles adhered to during the audit;

the total flow of funds, from receipt by the relevant central authority to finallise on the various activities; ,

.,. the correctness and completeness of the figures in the accounts and that theaccounts reflect the actual situation in the Programme;

any essential findings from the audit.

The audit sha11 be carried out in accordance with the above requirements and

inteniationa11y recognized audit principles and practises, which sha11 be stated inthe opinion.

Along with the above prescribed audit opinion copies of any other reports fromthe auditor regarding or significant to the implementation or follow-up of theProgramme sha11 be submitted to Norway.

Tanzania shall submit to Norway a final report within 2 months after thecompletion of the Programme

~ TI":

The final report shall give a summary of outputs and activities undertaken,achievements compared to Goal and Objectives and an assessment of theefficiency of the Programme.

Norway shall resp ond within 6 weeks upon receipt of the reports mentionedabove.

[6.

Nt;Jrway shall submit annual reports to Tanzania on payments made by Norwayaccording to Article V, Clause 3, above.

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Article vnProcurement

Tanzania undertakes to effect all procurements of goods and services for theProgramme and is responsible for the contracts to be signed. Tanzania shall9Pserve the highest ethics during the procurement and execution of the

!;:o~tracts.

ti

NI procurements shall be performed in accordance with generally acceptedprinciples and good procurement practices, and in accordance with Tanzania'spio<;;uremeI;1t regulations, altematively the !MF procurement regulations.

y c

lIivitations to tender or to make offer as well as procurement contract shall,'c.,i~$Pectively, include a clause stating that the tender/offer wiIl be rejected and';"',,-..c1b,~~ontract canceIled, in case any illegal or corrupt practices have been

c c., "

q9~ected with the award or the execution of the contract.

I~,

~J~""" "'No-"6ffer, gift, payments or benefit of any tind, which would or could beqQ~~ed as an illegal or corrupt practice, shall be accepted, either dir.ectly orili~ctly, as an inducement or reward for the award or execution of"""0.."". ".~f~~~ement contracts. Any such practice will be grounds for cancellation of@~:~weement and/or the procurement contract concemed.

3,"c' "",-,.:Janzåriia shall upon request furnish Norway with all relevant information on itscc .;--~prQ~urement practices and actions taken, and provide access to all related"_C~"'C:;E~$2~~

and documents. Norway may require access to information even duringi:;~~!~tilge in the procurement procedure when it is restricted to the officers~P?~if~~g the procurement. Restrictions on such information shall be respected~~~!~einformation can be made public without any risk of detriment to the;~~~E~~11~*fthe

procurement.

f~t~~"

"..;""?!~~a shall ensure in its nationallegislation adequate and effective means to

;t~~J1 and prevent illegal or corrupt practices.

Article vmReservation

fl Norway reserves the right to withhold disbursements at any time in case i.a.:-the Programme develops unfavourab1y in relation to the Goal and Objectives,,-'substantial deviations from agreed plans or budgets occur,-the documentation specified in Artic1e VI above, is not delivered as agreed,-the financial management of the Programme is not satisfactory,-the Contract referred to in Artic1e il, Claus e 4, above, is breached orterminated before allobligations therein are fulfilled.

Norway reserves the right to claim repayment in full or in part of fonds from theGrant if the fonds or part of the fonds are found not to be used in accordancewfudie teD11S and conditions ofthis Agreement or not satisfactory accounted

for..,

f2,

Before withholding any disbursements or claiming repayment there sha11 beCoAsultations between Tanzania and Norway with a view to reåching a solution.

13.

1'4 N~rway will cancel this Agreement or portion ofthis Agreement and have theri!?;4~ to demand the canceIlation of any contract financed under this Agreement,with immediate effect if it determines, witb respect to any contract to be~~~_~d under this Agreement, that corrupt or fraudulent practices were~gaged in by representatives of Tanzania or ofbeneficiary of aid funds duringprocurement or during the execution of the contract without Tanzania havingtaken timelyand appropriate action satisfactory to Norway to remedy the..sltuatlon.

5. Norway and Tanzania agree to cooperate on preventing corruption within andc

tbrOUgh the Programme. Norway and Tanzania undertake to take rapid legalmeasures in their respective countries to stop, investigate and prosecute inaccordance with nationallaw any person suspected of corruption or othermtentional misuse of resources.

;.

Article IXInformation -Evaluation -Reviews

,- "..c".-"c' ,

~',~,~~'qr~@ce with Article X of the Main Agreement the Parties wiil agree ~pon'~~~%~~,for information, evaluation and reviews of the Programme.cc,'c

~

Article XDistribution of the present Agreement

I

~e Parties shall ?i.stribute copi~s o~ th~ pre~ent Agre~ment to the respectivejnitiistries, authonties and other mstitutions mvolved ill the Programme or otherwisein need of information on its content.

Article XIEntry info Force -Termination

fl

Ifany dispute arises relating to the implementation or intetpretation of thepresent Agreement, there shall be consultations between the competentauthorities designated in Article il, Clause 2, above, with a view to reachingagreement.

1"2.

Ibis Agreement shall enter into force on the date of its signature and shallJemain in force until both Parties have fulfilled all obligations arising .from it.

Whether these obligations shall be regarded as fulfilled shall be determined inconsultation between the Parties.

f) Notwithstanding the previous paragraph both Parties may terminate the present~greement by giving three months written notice to the other Party.

~~

r;D6nem

the dayof 20032003

;;~

c"?For the Government of

C';,"

tbe:K$gdom of Norway

,i. ~'r"iF A"_""ti~vJ' IJ j 1 -..jf.;c ;"""""'~~ ~~~:'t

\""" rzng; -, rI' 4"',cc e ".' .,'1/.ur~:c,,_:,,:~"c" .I:';;;;. ""'"

Annua! Report Format

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".

ANNEX I

Agreed Programme Summary

Strengthening Revenue Forecasting, TaxPolicy and Legal Drafting of theMinistry ofFinance, Tanzania

,PROGRAMME TITLE:'o

.r'il~

Ministry ofFinance, TanzaniaINSTITUTION:

of the Programme is to strengthen the capacity and competence of the.: (MOF-TAN), especially in the areas oftax policy and tax

the Programme are:

the methodolog;y of research, policy development and

of economists with numbers and presentational skilIs (verbal

1RA and Auditor

Chambers.TRA for Jomt Policy

of all Government Notices and other tax-

greater awareness of substantive tax policy issues in Legal ServicesTRA.

A Grant financed by Norway notexceeding NOK 14,800,000 for 2003 -

2006

b

ANNEXII

ANNUAL REPORT FORMAT

l PROGRAMME m1-E

IMPLEMENTlNG INSTITU110N2.

3 PROGRAMME DESIGN (Goal, Objective, Outputs)

4 PROGRESS OF IMPLEMENTAnON:

Expenditure in relation to budget. A comparison between budget and actual costsas presented in the Statement of Accounts

Actual outputs compared to pli:lnlled outputs. Planned outputs are described in theAnnual Work Plan. D~viations from plans must be explained

Problems or risks; identification of specific challenges to the Programme

ASSESSI\.ffiNTS5.

Efficiency ofProgramme activities. The extent to which inputs are converted into

planned outputs

The need for adjustments to activity plans and/or planned inputs

Relevance of the Programme compared to dermed needs and concerns (asexpressed in the Objectives)

~