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    BAF 306 BAF 3 - Imposition and Liability of VAT

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    yudamwambafula30
    This document discusses Value Added Tax (VAT) in Tanzania, including: - Persons liable to pay VAT include importers, suppliers of goods/services in Tanzania, and purchasers of imported services. - The VAT rate is 18% and the amount payable is calculated by multiplying the supply/import value by the rate. Some supplies are exempt or zero-rated. - The value of imports includes customs value, customs duties, and other taxes (except VAT). For supplies, value means consideration paid directly or indirectly. - VAT becomes payable when an invoice is issued, consideration is received, or the time of supply occurs, whichever is earliest. Exemptions and

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    BAF 306 BAF 3 - Imposition and Liability of VAT

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    yudamwambafula30
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    This document discusses Value Added Tax (VAT) in Tanzania, including: - Persons liable to pay VAT include importers, suppliers of goods/services in Tanzania, and purchasers of imported services. - The VAT rate is 18% and the amount payable is calculated by multiplying the supply/import value by the rate. Some supplies are exempt or zero-rated. - The value of imports includes customs value, customs duties, and other taxes (except VAT). For supplies, value means consideration paid directly or indirectly. - VAT becomes payable when an invoice is issued, consideration is received, or the time of supply occurs, whichever is earliest. Exemptions and

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    BAF 306 BAF 3 - Imposition and liability of VAT

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    This document discusses Value Added Tax (VAT) in Tanzania, including: - Persons liable to pay VAT include importers, suppliers of goods/services in Tanzania, and purchasers of imported services. - The VAT rate is 18% and the amount payable is calculated by multiplying the supply/import value by the rate. Some supplies are exempt or zero-rated. - The value of imports includes customs value, customs duties, and other taxes (except VAT). For supplies, value means consideration paid directly or indirectly. - VAT becomes payable when an invoice is issued, consideration is received, or the time of supply occurs, whichever is earliest. Exemptions and

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    © All Rights Reserved
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    Download as pdf or txt
    13 views13 pages

    BAF 306 BAF 3 - Imposition and Liability of VAT

    Uploaded by

    yudamwambafula30
    This document discusses Value Added Tax (VAT) in Tanzania, including: - Persons liable to pay VAT include importers, suppliers of goods/services in Tanzania, and purchasers of imported services. - The VAT rate is 18% and the amount payable is calculated by multiplying the supply/import value by the rate. Some supplies are exempt or zero-rated. - The value of imports includes customs value, customs duties, and other taxes (except VAT). For supplies, value means consideration paid directly or indirectly. - VAT becomes payable when an invoice is issued, consideration is received, or the time of supply occurs, whichever is earliest. Exemptions and

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    VALUE ADDED TAX

    BAF III – BAF 306 Public Finance & Taxation II (Nov, 2023)
    3.0 Imposition and Liability of VAT
     chargeability provision,
     person liable to pay VAT,
     VAT rate and amount of payable,
     Exemptions,
     Value of import,
     value of supplies,
     consideration of supplies,
     subject matter of supplies,
     when VAT become payable (Time of supply)
    Imposition and Liability of VAT
     Chargeability Provision as per VAT Act S.3 states
    Value added tax shall be imposed and payable on
    taxable supplies and taxable imports.
     Person liable to pay VAT, as per VAT Act S.4 states,
    The following persons shall be liable to pay value added
    tax-
    a) in the case of a taxable import, the importer;
    b) in the case of a taxable supply that is made in Mainland
    Tanzania, the supplier; and
    c) in the case of a taxable supply of imported services,
    the purchaser.
    VAT rate and amount of payable
     VAT rate and amount of payable as per VAT Act S.5
    I. The amount of value added tax payable shall be
    calculated by multiplying the value of the supply or
    import by the value added tax rate, which shall be
    eighteen percent (18%).
    II. Where the supply or import is zero-rated, the value
    added tax rate shall be zero percent.
    III. Where a supply is both exempt and zero-rated, the
    supply shall be zero rated.
    IV. Where the supply is both exempt and taxable at
    standard rate, the supply shall be taxable at standard
    rate as specified under this section.
    Exemptions,
    Exemptions and rates to be specified by law as per VAT
    Act S.6 (read Section 6) and exemption schedule
     Read VAT Act S.95
     Read VAT Act Schedules from Pg 76
    i. Part I : supplies And Imports Exempt From Value Added
    Tax
    ii. Part II : Imports Exempt From Value Added Tax
    Value of import
    VAT Act S.9 states that, The value of an import of goods
    shall be the sum of-
    a) the value of goods for the purposes of customs duty
    under the East African Customs Management Act,
    whether or not duty is payable on the import;
    b) the amount of any customs duty payable on the import;
    and
    c) the amount of any tax, levy, fee, or fiscal charge other
    than customs duty and value added tax payable on the
    import of the goods
    Value of import Example
    Ushirika Co. Ltd imported goods worth Tshs 20,000,000 from
    China with custom value of 30,000,000, after paying freight of
    Tshs2,000,000; insurance for Tshs1,000,000 and Tshs200,000
    for clearance at a China port. Determine the taxable value for
    VAT purpose given the import duty as 25%, excise duty of
    20%, Railway and Development Levy of 1.5% and VAT rate of
    18%.
     The taxable value of imported goods is the value of the
    goods after including other expenses and taxes except
    VAT according to customs valuation model.
     Therefore the taxable value of imported goods is
    computed as follows:
    Value of import Example
    Details Amount
    A. Costs 20,000
    B. Freight 2,000
    C. Insurance 1,000
    D. Clearance 200
    E. Total before import duties (A+B+C+D) 23,200
    F. Import duties 25% (E*25%) 5,800
    G. Valued before excise duty (E+F) 29,000
    H. Excise duty 20% (G*20%) 5,800
    I. Railway and development Levy at (1.5% of E) 348
    J. Taxable value (G+H+I) 34,800
    VAT payable (J*18%) 6,264
    Subject Matter of Supplies
    VAT Act S.12
     VAT Act S.12(1) Anything capable of being supplied by
    any person other than money shall be the subject
    matter of a supply.
     VAT Act S.12(2) For purposes of this Act, every supply
    that is, or capable of being made shall be recognised as-
    a) a supply of goods;
    b) a supply of immovable property; or
    c) a supply of services.
    Read the whole section VAT Act S.12
    Consideration of supply
    VAT Act S.13(1) For purposes of this Act, “consideration” as
    used in relation to a supply, means the sum of the following
    amounts;
    a) The amount in money paid or payable by any person,
    whether directly or indirectly, in respect of, in response to,
    or for the inducement of the supply; and
    b) the fair market value of anything paid or payable in kind,
    whether directly or indirectly, by any person in respect of,
    in response to, or for the inducement of the supply.
    Read the whole section VAT Act S.13
    When Value Added Tax Becomes Payable
    When value added tax becomes payable as per VAT Act
    S.15 states;
    The value added tax imposed on a taxable supply shall
    become payable at the earlier of-
    a. the time when the invoice for the supply is issued by
    the supplier;
    b. the time when the consideration for the supply is
    received, in whole or in part; or
    c. the time of supply.
    Value of Taxable Supply
    Value of Taxable Supply as per VAT Act S.17 states;
    i. The value of a taxable supply which is made in Mainland
    Tanzania shall be the consideration for the supply
    reduced by an amount equal to the tax fraction of that
    consideration.
    ii. The value of a taxable supply of imported services shall
    be the consideration for the supply.
    iii. The value of a supply that is not a taxable supply shall
    be the consideration for the supply.
    iv. The value of a supply made without payment of
    consideration shall be a fair market value.
    THANYOU
    END

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