VALUE ADDED TAX

BAF III – BAF 306 Public Finance & Taxation II (Nov, 2023)
 2.0 VAT registration and deregistration
 registration requirement,
 types of registration
 time of application of registration,
 mode of application,
 processing of application,
 Rights And Obligations Of VAT Registered Persons
 Documents Maintained by Registered Trader
 Deregistration
 Registration requirement
i. Future Turnover;
VAT Act S.28(1) A person shall, in respect of any month, be registered
for value added tax from the first day of that month, if there is
reasonable ground to expect that the person’s turnover in the twelve
months period commencing at the beginning of the previous month
will be equal to or greater than the registration threshold.
ii. Historical Turnover
VAT Act S.28 (2) A person is required, in respect of any month, to be
registered for value added tax from the first day of that month if-
a) the person’s turnover is equal to or greater than the registration
threshold in the period of twelve months ending at the end of
the previous month; or
b) the person’s turnover is equal to or greater than one half of the
registration threshold in the period of six months ending at the
end of the previous month.
 Registration requirement
iii. Exempt from Registration
VAT Act S.28(3) The provisions of subsection (2) shall not apply to a person
where the Commissioner General is satisfied, on the basis of objective
evidence submitted to the Commissioner General, that the requirements of
subsection (1) are not met.
iv. Threshold
VAT Act S.28(4) The amount of registration threshold shall be as prescribed in
the regulations (W.E.F 1st July 2023 is TZS 200,000,000)
v. Turnover Sum
VAT Act S.(5) For purposes of this Part, a person’s turnover shall be the sum
of-
a. total value of supplies made, or to be made, by the person in the
course of an economic activity carried out during that period; and
b. total value of supplies of imported services made, or to be made, to the
person during the period that would be taxable supplies if the person was
a taxable person during that period.
 Registration requirement [FHETTE]
vi. Excluded Amounts
VAT Act S.28(6) The following amounts shall be excluded
when calculating the person’s turnover for the purpose of
this Part-
a. the value of a supply that would not be a taxable supply
if the person were a taxable person;
b. the value of a sale of a capital asset of the person;
c. the value of a supply made solely as a consequence of
selling an economic activity or part of that economic
activity as a going concern; and
d. the value of supplies made solely as a consequence of
permanently ceasing to carry on an economic activity.
 Other persons required to be registered
VAT Act S. 29(1) Notwithstanding the provisions of section 28, a
person shall be required to be registered for value added tax if-
i. Professional Services as per VAT Act S.29(1)
a. the person carries on an economic activity involving the
supply of professional services in Mainland Tanzania,
whether those professional services are provided by the
person, a member or employee of that person; and
b. supplies of such services in Mainland Tanzania are ordinarily
made by a person who-
• is permitted, approved, licensed, or registered to provide such
professional services under any other written laws; or
• belongs to a professional association that has uniform
national registration requirements relating to the supply of
professional services of that kind
 Other persons required to be registered
ii. A Government entity or institution as per VAT Act S.29(2)
A Government entity or institution which carries on economic
activity shall be required to be registered for value added tax.
iii. intending trader as per VAT Act S.29(3)
Notwithstanding the provisions of section 28, the Commissioner
General may register a taxable person as intending trader upon
fulfilling the following conditions-
(a) provide sufficient evidence to satisfy the Commissioner of his
intention to commence an economic activity, including contracts,
tenders, building plans, business plans, bank financing;
(b) the person makes or will make supplies that will be taxable
supplies if the person is registered; and
(c) specify the period within which the intended economic activity
commences production of taxable supplies.
Types of VAT Registration
There are 3 main types of registrations:
i. Normal registration, The registration limit is currently a
cumulative total taxable turnover of Tshs 200,000,000 for the last
twelve consecutive months(or for the last 6 months if it exceeds
100mil) VAT Act S.28
ii. Compulsory registration, When a person fails to apply for the
VAT registration within 30 days, the CG, compulsory register the
person and not later than 14 days and there is good reason
including protection of Government revenue VAT Act S.33, and
the commissioner general may register the person for VAT
regardless of the turnover VAT Act S.29(1) [(i) and (ii)]
iii. intending traders’ registration, CG shall register applicant as an
intending trader upon satisfaction that the documentary
evidence indicates that the applicant will make taxable supplies.
VAT Act S.29(1) (iii)
 Time of application for registration
S.30.-(1) A person who is required to be registered for value
added tax shall within thirty days from the date of such
requirement, make application for registration to the
Commissioner General.
(2) An application for registration of an intending trader may
be made at any time.
(3) An application for registration under this section may be
made by a representative. (read The Tax Administration Act
s.27)
 Mode of application
S.31. The Minister may prescribe in the regulations the manner of
making applications for registration.
 Application for VAT registration manually by filling form
ITX245.02.E Application for Registration for VAT.(see attached
form VAT Application Form)
 Upon registration, a taxpayer shall be issued with a
Certificate of Registration stating the name and principal
place of business of the taxable person, the date on which the
registration takes effect, his Taxpayer Identification Number
and his VAT registration number.
 A person shall show his Taxpayer Identification Number
and his VAT registration number in any return, notice of
appeal or other documents used for official VAT purposes and
display his certificate of registration in a noticeable position at
his principal place of business.
 Rights & Obligations Of VAT Registered Persons
Then the person will be entitled to the following requirements:
i. Charge output tax on each taxable supply
ii. File returns
iii. Recover input tax (subject to some restrictions)on
business purchases and expenses
iv. Maintain appropriate VAT records
v. Use Taxpayer Identification Number and a Value Added
Tax Registration Number on all documents required to be
issued.
vi. Notification of changes, A registered person shall notify
the Commissioner General in writing within fourteen days
(Read VAT Act S.37)
Statutory Records
Statutory Records To Be Maintained By VAT Registered Traders
1. “tax invoice” means a document issued in accordance with section
86 and regulations made under VAT Act;
 S.86 (1)(b)Tax Invoice must include the following information-
i. the date on which it is issued;
ii. the name, Taxpayer Identification Number and Value Added Tax
Registration Number of the supplier;
iii. the description, quantity, and other relevant specifications of the things
supplied;
iv. the total consideration payable for the supply and the amount of
value added tax included in that consideration;
v. the name, address, Taxpayer Identification Number and value
added tax registration number of the customer;
vi. any other additional information as may be prescribed in the regulations
Statutory Records
Statutory Records To Be Maintained By VAT Registered Traders
2. Adjustment notes, Taxable persons should issue the adjustment notes
when there is increasing or decreasing adjustment event of the
previously accounted VAT. And shall include the following information-
“tax invoice” means a document issued in accordance with section 86 and
regulations made under VAT Act;
 S.87 (1)(b)Adjustment Note must include the following information-
i. the date on which it is issued;
ii. the name, Taxpayer’s Identification Number and Value Added Tax Registration
Number of the supplier;
iii. the nature of the adjustment event and the supply to which it relates;
iv. the effect on the amount of value added tax payable on the supply;
v. if the effect on the value added tax payable on the supply exceeds, the
minimum amount prescribed in the regulations, the name, Taxpayer’s
Identification Number and Value Added Tax Registration Number of the customer;
and
Statutory Records
Statutory Records To Be Maintained By VAT Registered Traders
3. Documentation issued by or to agents (s.88)
• Where a taxable supply is made by an agent or to an agent on
behalf of a principal and both the agent and principal are
registered persons, any documentation required to be issued by
the principal, including tax documentation, may be issued by the
agent or to an agent in the name, address, Taxpayers
Identification Number and value added tax registration
number of the principal.
• Where a taxable supply is made to an agent acting on behalf of a
principal and both the agent and the principal are registered, any
documentation required to be issued to the principal, including a
tax invoice generated by electronic fiscal device or adjustment
note, may be issued to the agent and shall be in the name,
address, Taxpayer Identification Number and value added tax
registration number of the principal.
Statutory Records
Statutory Records To Be Maintained By VAT Registered Traders
4. Records and accounts (s. 89)
A taxable person shall keep record of all accounts, documents, returns, and other records
that are required to be issued or given under this Act, or such other tax law, including
 tax invoices and adjustment notes issued and received by the person;
 customs documentation relating to imports and exports of goods by the person;
 records relating to supplies of imported services to the person, whether or not those
supplies were taxable supplies;
 a value added tax account that records, for each tax period, all the output tax payable
by the person in that period, or the input tax credit the person is allowed in that period,
and all the increasing and decreasing adjustments that the person is required or
entitled to make in that period; and
 records showing the deposit of amounts paid to the Commissioner General under this
Act.
The records referred to shall be maintained-
 for at least five years from the end of the tax period to which they relate; or
 until a later date on which the final decision is made in any audit, recovery
proceedings, dispute, prosecution, or other proceedings under this Act relating to that
tax period.
Circumstances for deregistration VAT Act S.41
i. Taxable person ceases to make taxable supplies. If a taxable
person ceases to make taxable supplies such person will then be
cancelled from VAT registration.
ii. Taxable turnover falls below the registration threshold. A
registered person ceased to be liable for registration when the
Commissioner is satisfied that the level of taxable supplies has fallen
below the registration threshold.
iii. Cessation of economic activity /business If a registered person
ceases to carry on an economic activity and will no longer carry on a
business, the registration may be cancelled. VAT S.41(1) (b) gives
powers to the Commissioner General to cancel the registration of a
person who is not carrying on an economic activity;
iv. Provision of false or misleading information Section 41(1) (a)
provides that, the commissioner may cancel the registration of the
person obtained registration by providing false or misleading
information;
Obligations after cancellation of registration
A person who ceases to be registered remains VAT Act S.42
i. immediately cease to be a registered person
ii. immediately cease to use or issue any documents including
tax invoices and adjustment notes that identify him as a
registered person and surrender value added tax
registration certificate; and
iii. within thirty days after the date of cancellation of his registration,
file a final value added tax return and pay all taxes due under this
Act.(liable for any liabilities or obligations)
THANYOU
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