the supplier will bear any duty or tax; and
the value covers any right to use any patent, design or trademark, in respect of the supply.
Where there has been a fraudulent act or omission, anti-avoidance provisions give the Commissioner the power to amend any value used.
Accounting basis and tax period
VAT returns are filed every month. From 1 July 2009, VAT returns can be filed electronically.
A taxable person is required to record each supply made and account for VAT on it at the time of supply (i.e. in the month in which the supply took place). The accounting for input tax is based on the accrual principle (i.e. upon the receipt of the tax invoice).
Returns and payment of VAT
A VAT return on the prescribed form VAT 201 must be lodged with any VAT payment due or claim for repayment, by the last business day of the month, following the month in which the relevant transactions were incurred. Electronic filing of VAT returns is currently not permitted.
VAT on imported taxable goods is payable at the time customs duty is payable. Where the imported goods are capital goods as defined in the Customs Tariff, special relief is allowed if certain procedures are followed.
VAT is payable by the last working day of the calendar month following the end of the prescribed accounting period. Payment can be made in cash, by cheque or by a bank transfer. Direct bank transfer is allowed, provided proof of payment is enclosed with the return.
Interest and penalties
The penalties for late filing of the return are:
a fine of TZS500,000 and/or 2–12 months imprisonment;
a penalty of TZS50,000 or 1% of the VAT due for the first month, then TZS100,000 or 2% for each further month late, for each missing return;
interest charged at the Central Bank rate plus 5%.
At the end of a six-month period commencing with the return when a repayment first became due, taxpayers may apply for the refund of any accumulated or residual credit. A taxpayer in a regular repayment situation, defined as one who over a six-month period is in a net credit situation, can apply for repayments to be made on a monthly basis.
If a business does not wish to make a claim, it can elect to carry forward excess VAT credits for offset against future payments.
All refund claims must be examined by a registered auditor who will issue a ‘certificate of genuineness’. There is a three-year time limit for lodging VAT refund claims. In theory, interest should be paid to the taxpayer if properly submitted claims for refund are not repaid within 30 days.
Objections and appeals
If an objection to a VAT assessment is to be lodged, it must be lodged with the Commissioner General within 30 days from the date of the assessment.
If the assessment is not resolved and TRA confirms the assessment and the taxpayer wishes to dispute the assessment, he must lodge a notice of intention to appeal with the Tax
Revenue Appeals Board within 30 days, and a statement of the ground for appeal within 45 days from the date of the notice of confirmation of the assessment.
This same appeal process must be followed in any case where the taxpayer wishes to dispute the TRA’s calculation of the amount due for refund or the refusal to make a refund.
A taxpayer can appeal against the decision of the Appeals Board to the Tax Revenue Appeals Tribunal. A notice of intention to appeal must be lodged within 30 days from the date of the Board’s ruling and a statement of the grounds for appeal must be submitted within 15 days of lodging the notice of intention to appeal.
A taxpayer can appeal against the decision of the Tax Appeals Tribunal to the Court of Appeal of Tanzania.
An invoice for VAT purposes should contain the following information:
name, address, VAT registration number and Taxpayer Identification Number (TIN) of supplier and recipient;
description of goods;
VAT-exclusive and VAT-inclusive values;
rate of VAT;
any discounts; and
the words ‘tax invoice’ prominently displayed.