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February 11, 2022
2022-0246

Tanzania Revenue Authority upgrades VAT electronic filing system

Executive summary

On 3 February 2022, the Tanzania Revenue Authority (TRA) issued a public notice on the deployment of an upgraded Value Added Tax (VAT) electronic (e)-filing system which will be rolled out on 1 March 2022. The upgrade aims to simplify the filing processes to improve taxpayers' filing of VAT returns.

Since the new e-filing system does not automatically capture any carried forward credits for the period of February 2022, VAT-registered persons with carryforward input VAT credits up to February 2022 are required to apply for a refund or notify the respective TRA office of their position for audit or verification of the credit amount.

Detailed discussion

What's new with the upgraded system

  • The upgraded system provides for:
  • Access through the normal e-filing account used by the taxpayer for other tax returns e.g., Income and Employment Tax Returns.
  • Simplified filing of VAT returns. For taxable purchases, taxpayers will only be required now to key-in verification codes as they appear on the Electronic Fiscal Device (EFD) receipts/tax invoices. This is different from the current system where a taxpayer needs to include suppliers' name, TIN, VRN, and invoice number, among others.
  • Taxpayers to make adjustments on the occurrence of adjusting events.
  • Input VAT to only be accepted by the system with EFD receipts or tax invoices showing:
    • Verification codes
    • Buyer's TIN
  • Input VAT claims on imports to be supported by a valid Tanzania Single Administrative Document (TANSAD).
  • Automatic verification of EFD receipts/tax invoices and TANSAD.
  • Automatic apportionment of input VAT.
  • Issuance of acknowledgment of receipt of the VAT return and an assessment.

What traders should do before the enrollment of the system

Traders should take the following steps before enrolling in the system:

  • Apply for refund of input VAT credits carried forward or notify TRA of the input VAT credits to be verified/audited to allow the taxpayer to carry forward the balance in the new system.
  • Traders who are yet to upgrade their EFD machines to protocol 2.1 software that enables the issuance of EFD receipts/tax invoices with special verification codes, should ensure that they do so immediately to facilitate automatic verification of invoices in the upgraded e-filing system.

What traders should do upon the enrollment of the upgraded system

Once enrolled in the upgraded system, taxpayers should:

  • Familiarize themselves with the upgraded system upon its implementation in March 2022 to ensure the smooth filing of the VAT return for March and going forward.
  • Obtain EFD receipts/tax invoices from suppliers with verification codes in support of claims for input VAT.
  • Ensure that valid TANSAD is in place for input VAT claims on imports.
  • Maintain proper records of VAT returns filed with the former e-filing system.

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For additional information with respect to this Alert, please contact the following:

Ernst & Young (Tanzania), Dar es Salaam

Ernst & Young Société d'Avocats, Pan African Tax – Transfer Pricing Desk, Paris

Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London

Ernst & Young LLP (United States), Pan African Tax Desk, New York

 

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