Although electronic invoices may be issued, hard copies of electronic invoices must be made available for inspection. The TRA also requires the purchaser to hold the original tax invoice.
Foreign languages may not be used on the invoice. Invoicing may be done in a foreign currency.
Credit notes and debit notes
Credit notes may be issued if a supply is cancelled, the goods are returned to the supplier, the value of the supply is reduced, or if there is a bad debt (and the Commissioner is satisfied that such a debt is bad). Credit notes must contain all the information required for a tax invoice, and must also state the amount of credit and the reason for it. Debit notes are issued if the amount of tax originally invoiced is found to be understated.
Additional export documentation
Exporters who claim refunds of VAT must provide certificates of landing in respect of their sales.
Records must be kept for a period of five years. Records may be kept outside Tanzania, but must be made available for inspection in Tanzania when required. Records may be kept in electronic form, but hard copies must be made available for inspection.
Specific VAT rules
Land and buildings
The sale or lease of an interest in land is exempt from VAT. From 1 July 2009, it is proposed that the sale of used property and the lease of most residential property will no longer be exempt. The sale or lease of commercial or nonresidential property, whether new or used, is standard rated.
An operating lease is a standard rated supply of a service. VAT is chargeable (and deductible) on the periodic leasing payments. Finance leases are treated as the immediate sale of goods. VAT on the full value of the goods is accounted for by the supplier at the time they are made available to the customer, and this may be deducted by the purchaser, subject to the normal rules. If the subject of the transaction is a car, input tax deduction is blocked.
The leasing of aircraft is exempt for VAT purposes.
Gifts of goods are taxable supplies. VAT should be accounted for at the open market value. There is no de minimis limit for business gifts, nor any concessions for business promotion schemes.
VAT is chargeable on the sale of secondhand goods unless the items are exempt from VAT or are ‘motorcars’, as defined. Exports of secondhand goods also qualify for zero rating.
There are two special schemes to enable retailers to calculate output tax due. They do not have to calculate and keep a record of the VAT on each transaction as it takes place, nor issue a tax invoice unless the customer asks for one.
Takings must be separated, at the point of sale, between taxable and exempt supplies.
Each day at the close of business, the gross takings for taxable and exempt supplies must be recorded.
At the end of the accounting period, the records of taxable daily gross takings must be totalled.
The VAT to be included in the VAT return is calculated by applying the tax fraction (20/120) to that total.
Gross takings for each day are recorded.
At the end of the accounting period, daily gross takings for that period must be totalled.
Those gross takings must be allocated to taxable supplies in the same proportion that the value of taxable purchases made in the period bears to the value of total purchases in that period.
The VAT for the accounting period must be calculated from the gross takings allocated to taxable supplies using the tax fraction.
Electronic cash registers
Retailers must use electronic cash registers (ECRs) to record their daily sales and issue receipts for all transactions. Retailers are taxable persons who make supplies of goods and services by retail direct to the consumer in small quantities that are not meant for resale. Retailers include shops, restaurants and other catering outlets, bars and photographic studios. Wholesalers, sub-wholesalers and businesses like opticians, accountants and internet service providers are not retailers and must therefore issue tax invoices for each transaction.
Tourist services such as tour guiding, game driving, water safaris, animal or bird watching, park fees, tourist charter services and ground transport are