Various Tax Regulations Issued

• Remission of Interest and Penalties Regulations revoked
• VAT General Regulations amended
• VAT Exemption Management Procedures Regulations promulgated

In a bid to enhance tax administration in Tanzania, the Minister for Finance and Planning (the Minister) has issued three sets of Tax Regulations namely the Tax Administration (Remission of Interests and Penalties) (Revocation) Regulations; the Value Added Tax (General) (Amendment) Regulations, and the Value Added Tax (Exemption Management Procedures) Regulations.

It is worth noting that the Tax Administration (Remission of Interests and Penalties) Regulations, 2020 have been revoked. This revocation is in line with the Finance Act of 2021 which took from the Minister the mandate to prescribe eligibility, duration and procedure of accessing remission of tax interest and penalties. It should be remembered that, with the 2021 amendments, the power to remit tax penalty and interest is solely vested with the Commissioner-General of TRA (CG).

On the other hand, the Value Added Tax (General) Regulations, 2015 have been amended to accommodate the procedures for goods transferred to Mainland Tanzania as well as an application for refund of goods purchased by registered taxpayers in Zanzibar. The Regulations require goods transferred from Tanzania Zanzibar to Mainland Tanzania to be cleared through ports of entry in Mainland Tanzania and charged VAT equal to the difference between the VAT rates applicable in Mainland Tanzania and Tanzania Zanzibar.

Further to the above, VAT on goods supplied to Zanzibar is payable at the standard rate and subsequently, a refund is available to the purchaser upon applying and submitting the relevant documents to the CG.

Moreover, regarding the Value Added Tax (Exemption Management Procedures) Regulations, the major changes brought by the Regulations, among others, are: removing the powers of granting exemptions from the Minister and vesting the same with the CG, and providing for sixty days before the commencement of the project (as opposed to 30 days) as a period within which an application for exemption should be lodged.

The Exemption Regulations require an application for tax exemption to be made to the CG in a prescribed form and be accompanied by a number of documents as provided under the Regulations. Where an application is approved, the CG will issue an Exemption Certificate in a prescribed form as set out in the schedule to the Regulations.

It is important to note that, after being issued with an Exemption Certificate, the applicant is obliged to process utilization of the granted tax exemption by filling and submitting a prescribed form to the respective TRA’s Department or Regional office.

Lastly, and to ensure no misuse, the law requires the applicant of the exemption to submit to the CG a utilization report of the granted tax exemption. This report is required to be submitted within 30 days after a lapse of every 6 months for a 12-month project and 12 months for projects with periods of more than 1 year. Also, the current Regulations revoke the Value Added Tax (Exemption Monitoring Procedures) Regulations, 2018.