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In brief
The commencement date of the VAT Act 2014 (the new Act), which received Presidential assent on
11 December 2014, is now confirmed as 1 July 2015. This Act, which repeals the existing VAT Act 1997
(the 1997 Act), will introduce fundamental changes to widen the scope of VAT, reduce exemptions,
adopt best international VAT practice and simplify administration. Regulations to be issued under the
new Act are still pending. Given the fundamental changes introduced, it is important that all taxpayers
ensure that they fully understand the implications for their particular business.
Commencement
persons economic
activities which have a
useful economic life of at
least one year and are not
(a) consumables or raw
materials, and (b) goods
imported for the principal
purpose of resale in the
ordinary course of
carrying on the persons
economic activity, whether
or not in the form or state
in which the goods were
imported.
A Government Notice
signed on 3 June 2015 by
the Minister for Finance
confirms that 1 July 2015 is
the commencement date
for the new Act.
Imports
Imports capital goods
Introduction of deferral of
VAT on imported capital
goods but subject to a
requirement for (i)
application for approval by
TRA and (ii) provision of
security; VAT deferral can
be refused where there is
any outstanding tax
liability or outstanding tax
return under any tax law.
Input Tax
Input tax deduction
Imports services
www.pwc.com
Partial exemption
Threshold - Introduction of
a de minimis (minimum)
threshold for VAT refund
claim (otherwise the credit
must be carried forward).
The threshold will be set
out in the Regulations (as
yet unpublished).
PwC
Default refund
qualification period - Six
months. However,
companies with 50% or
more of turnover that
relates or will relate to zero
rated supplies (normally,
exports) will automatically
qualify for refund on
monthly basis.
Time limit for the
Tanzania Revenue
Authority (TRA) to
respond to refund request increased to 90 days (from
30 days under the 1997
Act).
Exempt supplies
Types of supply
Zero-rated supplies
Refunds
Tanzania, services
connected with temporary
imports, intellectual
property rights for use
outside Tanzania, supply of
telecommunications
services by a
telecommunications service
provider to a non-resident
telecommunications service
provider.
Valuation,
Consideration
Supplies at open or fair
market value
Deposits
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Discounts / rebates
Reimbursements
A reimbursement is
excluded from
consideration where it is
the exact reimbursement of
costs incurred by an agent
for a principal.
Registration
Registration general
PwC
Automatic registration
Mandatory registration for
professional services
providers (e.g. lawyers and
accountants), and for
Government
entities/institutions
carrying on economic
activity.
Intending trader
registration Conditions
include: (i) provision of
sufficient evidence to
satisfy the Commissioner of
intention to commence an
economic activity,
including contracts,
tenders, building plans,
business plans, bank
financing; (ii) the person
makes or will make
supplies that will be taxable
supplies if the person is
registered; and (iii)
specification of the period
within which the intended
economic activity will
commence production of
taxable supplies.
in Mainland Tanzania
who effectively uses or
enjoys the services in
Mainland Tanzania;
VAT representative - A
non-resident who carries
on economic activity in
Mainland Tanzania without
a fixed place and makes
taxable supplies in excess
of the VAT registration
threshold is required to
appoint a VAT
representative.
Deemed supply - There is a
deemed supply in Tanzania
where supplies are made to
an unregistered person if
the supplies are in the form
of:
Services performed in
Mainland Tanzania, if
the services are
received by a person
Electronic services
delivered to a person
who is in Mainland
Tanzania at the time
when the service is
delivered.
Adjustment events
Bad debts
Payment is overdue
for more than 12
months and the debt
has been written off.
Payment is overdue
for more than 18
months.
A customer has an
obligation to make an
increasing adjustment if
payment is overdue for
more than 18 months.
If payment is made
subsequent to the
adjustments above, then
further adjustments should
be made as appropriate.
Other adjustments
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Other matters
Transfer of Going Concern
There is no longer
provision for the exclusion
of penalties and interest on
voluntary disclosure.
Financial services
Insurance exemption
limited to health and life
insurance / reinsurance, so
non-life is now taxable.
Charitable
PwC
Exemptions in respect of
agricultural products and food
for human consumption are
generally limited to
unprocessed supplies;
although unprocessed is not
defined, the exempt items listed
are identified with HS codes.
In addition, maize flour and
wheat flour are specifically
included in the list of
exemptions.
Correction of errors
Education
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Extractive Industries
Exempt under an
agreement entered into
between the Government
and another Government
or an international agency.
PwC
Non-commercial activities
by a Government entity or
institution (except to the
extent that the activity
involves making supplies of
goods, services or
immovable property that
are to be supplied in
Mainland Tanzania by a
person who is a nonGovernment entity).
Individuals
Petroleum products
Postal supplies
Property
A sale of immovable
property, to the extent that
the property relates to
residential premises, not
including: (a) the first sale
of newly constructed
residential premises; or (b)
a subsequent sale if the
premises have been
occupied as a residence for
less than two years.
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Technology
No exemption for
computers (unlike the 1997
Act).
Telecommunications
Detailed definition of
telecommunication
service and
telecommunications
service provider see
Appendix.
PwC
Place of supply of
telecommunication services
is generally consistent with
the destination principle.
Services initiated in
Tanzania - where the
initiator of the supply is a
person in Mainland
Tanzania who is not a
telecommunications
company, the place of
supply will be Mainland
Tanzania.
Tourism
Prepaid telecommunication
services:
Inter-carrier services
Inter-carrier services from
a resident provider to a
non-resident provider are
subject to the zero rate. A
telecommunications service
provider based in Zanzibar
is regarded as nonresident.
Transport / International
Zero-rated supplies:
International transport but
with exclusion of ancillary
transport services as
defined (see Appendix).
Exempt supplies:
Transportation of person
by any means of
conveyance other than taxi
cabs, rental cars or boat
Water /Power
Solar equipment ( in
particular, solar panels,
modules, solar charger
controllers, solar inverter,
solar lights, vacuum tube
solar collectors and solar
battery). (However, wind
generators and liquid
elevators are no longer
included in list of
exemptions (unlike the
1997 Act)).
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Lets talk
Indirect Taxes in Tanzania
For further advice on how the new VAT Act 2014 might affect your business, or advice on other indirect tax matters,
please contact our specialist Indirect Tax team:
Rishit Shah
Partner
+255 22 219 2601
rishit.shah@tz.pwc.com
Joseph Lyimo
Tax Director Indirect Taxes
+255 22 219 2613
joseph.lyimo@tz.pwc.com
Joseph Waziri
Tax Manager Indirect Taxes
+255 22 219 2617
joseph.waziri@tz.pwc.com
Miriam Sudi
Senior Consultant Indirect Taxes
+255 22 219 2648
miriam.sudi@tz.pwc.com
Indirect Taxes in East Africa
For advice on indirect tax developments across East Africa, please contact:
Job Kabochi
Partner - Indirect Taxes
+254 20 285 5653
job.kabochi@ke.pwc.com
Publications
For other publications, do refer to www.pwc.com/tz or follow us at @pwc_tz
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firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.
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Appendix
Selected Definitions - Communications
electronic services means any of the following services provided or delivered through a telecommunications
network(a) websites, web-hosting, or remote maintenance of programmes and equipment;
(b) software and the updating thereof;
(c) images, text, and information;
(d) access to databases;
(e) self-education packages;
(f) music, films, and games, including gaming activities; and
(g) political, cultural, artistic, sporting, scientific, and other broadcasts and events including broadcast television.
telecommunication service means a service of any description provided by a company by means of any
transmission, emission or reception of signs, signals, writing, images and sounds or intelligible information of any
nature, by wire, optical, visual or other electromagnetic means or systems, including(a) voice, voice mail, data services, audio text services, video text services, radio paging and other emerging
telecommunication services;
(b) fixed telephone services including provision of access to and use of the public switched or non-switched telephone
network for the transmission and switching of voice, data and video, inbound and outbound telephone service to and
from national and international destinations;
(c) cellular mobile telephone services including provision of access to and use of switched or non-switched networks
for the transmission of voice, data, video and value added services, inbound and outbound roaming services to and
from national and international destinations;
(d) carrier services including provision of wired, optical fibre or wireless facilities and any other technology to
originate, terminate or transit calls, charging for interconnection, settlement or termination of domestic or
international calls, charging for jointly used facilities including pole attachments, charging for the exclusive use of
circuits, a leased circuit or a dedicated link including a speech circuit, data circuit or a telegraph circuit;
(e) provision of call management services for a fee including call waiting, call forwarding, caller identification,
multi calling, call display, call return, call screen, call blocking, automatic call-back, call answer, voice mail, voice
menus and video conferencing;
(f) private network services including provision of wired, optical fibre, wireless or any other technologies of
electronic communication link between specified points for the exclusive use of the client;
(g) data transmission services including provision of access to wired or wireless facilities and services specifically
designed for efficient transmission of data; and
(h) communication through facsimile, pager, telegraph, telex and other telecommunication service;
telecommunications service provider means a person licensed by the Tanzania Communications Regulatory
Authority or an equivalent foreign body to provide telecommunication services;
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