tanzania revenue authority customs and...

TANZANIA REVENUE AUTHORITY TRA 1

TANZANIA REVENUE AUTHORITY

Tax issues, including exemptions and compliance for

NGOs Working in Tanzania

by

Tiagi M.Kabisi

Deputy Commissioner Customs and Excise

31 May 2012 1

TANZANIA REVENUE AUTHORITY TRA

Outlines

Legal Authority

Types of organizations involved

Treasury Voucher System (TVC)

Procedure to be followed

Items qualifying for Tax exemption

Items not qualifying for VAT exemptions

Important Conditions

Check list for approving exemption to NGOs

Processing of Exemption

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2


1. Legal Authority

Five schedule of EACCMA Item 5 and 6 exempt

Import Duty

Government Notice number 197 & 200 of 2001 Exempt import Duty and Excise Duty

Item 10 of the Third Schedule to the VAT Act,

1997 as amended by 2011 Finance Act. Exempt Value Added Tax (VAT)

3

3


2. Types of Organizations involved

Registered Non Religious Organizations

Charitable community-based

Other non-Profit driven organisation/institution

Local

International

Registered Religious organisation

4

4


3. Treasury Voucher Systems and types of

taxes to be exempted

Tax exemptions to these Organizations follow

Treasury Voucher and Cheque System (TVC)

Whereby the Government pays taxes on behalf

of these organizations, taxes involved are:

Import Duty

Excise Duty

VAT on Importation

VAT on domestic supplies

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5


Procedure of processing exemption – cont.

A: for imported Goods

Importer is required to apply for exemption approval letter to the Commissioner for Customs and Excise attaching along with their application letter, a original Confirmation letter from District Commissioner, copies of importation documents, a copy of Certificate of Registration issued by the Ministry of Home Affairs, and a copy of TIN certificate.

It take one working days to get a letter of exemption approved by the Commissioner for Customs and Excise.

The applicant after receiving a letter of exemption from the Commissioner for Customs, will be required to declare his/her imported goods to Customs through a Licensed Customs agent.

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6


Procedure of processing exemption –

A: for imported Goods

Customs will process such declaration and issue assessment notice, assessment notice will be dispatched to the Treasury for a treasury cheque

Upon receiving Treasury cheque, Customs will issue a release order to the importer to allow him/her take delivery of the goods from the port

If goods have been properly declared, currently it is an average of five days from lodgment to release of goods.

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7


Procedure of processing exemption

B: for domestic supplies

The applicant will approach the Domestic Revenue Tax Region where such organization operates and submit documents as listed in the check list (item 7 of this presentation) for approving exemption together with an Invoice, a Treasury Voucher will be prepared and sent to the Treasury for a Treasury Cheque

Upon receiving Treasury Cheque, the applicant will be requested to complete form VAT 223/224

Upon approval of VAT form 223/224 the applicant will proceed to his/her supplier to take his/her VAT free goods. VAT Form 223/224 are approved within 24hours.

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8


4. Items qualifying for tax exemption

Goods or Services intended to be used solely by the

Organisation or Institution subject to the following limitations:

In the case of religious organisation, the advancement of

religious

Use by the organisation or institution in the excution of its

functions and for relieving persons from the effects of natural

calamities, hazards or disaster.

The development, maintenance or renovation by the

organisation of projects relating to health, education, training,

water supply, infrastructure or any other projects relating to

advancement of community.

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9


5. Exclusion

Non religious organisations (NGO) will not be

exempted from VAT on importation of or purchase

of goods intended to be used by the organization. For example:

A. Consumables such as:

-Foodstuff

-Beverages,

-Spare parts,

- Toilet Papers,

-Detergent and other washing liquid

-Parking material

-Flowers

B. Motor vehicles of ten years or above

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10


However, Importations or local purchases by Non

Religious NGOs of household consumables

for subsequent supply to:

Orphanages,

Day Care Centres, and

Schools

are eligible for VAT exemption.

Household consumables includes:

food,

Clothing and

toiletries

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11


6. Important conditions

Goods shall not be disposed off in any manner

without prior approval of Commissioner for

Customs & Excise

It is a requirement that District

Commissioner’s letter must be signed by the

DC in person – representation not allowed

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12


7. Checklist for approving exemption to Religious

Organization and NGOs

An application letter to the Commissioner for Customs and Excise and attaching thereto:

1. District Commissioner letter to confirm the existence of the organisation

2. Certificate of registration of the organisation is required, from the Registrar of Society (Ministry of home affairs)

3. Bill of Lading or Airway Bill or Road Consignment Note

4. Invoice/Packing List or Donation Certificate

5. Government Notice if any

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13


8. PROCESSING OF EXEMPTION

Application and Verification Stage

Application Letter attached with relevant attachment

Application letter with attachment are scrutinized

Any query raised ? Conduct Physical Verification

Query

confirmed? Issue Approval

Yes

ON

NO

Yes

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14


PROCESSING OF EXEMPTION cont.

Utilization Stage

Application lodge the approval together

With entries and other

supporting documents

at CSC Reject and inform applicant

Yes

Send Treasury

Voucher

Request

To Treasury

Yes

No

Receive Treasury

Voucher from

Treasury

Exemption accepted

Clear the goods

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TANZANIA REVENUE AUTHORITY TRA 16

16

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