Q&A – 10 September 2012

Who should be VAT registered

I am a new company in Tanzania and very likely will not receive any VAT as I am export oriented. Do I still need to be registered for VAT? What is the threshold limit for VAT registration? What is the significance of the electronic fiscal device? Must I use it? What if I don’t?
PM, Dar

The VAT shall be charged on any supply of goods or services in Tanzania where it is a taxable supply made by a taxable person in the course of or in furtherance of any business carried on by him. Section 19 of VAT Act states that any person whose taxable turnover exceeds, or the person has reason to believe will exceed, the turnover prescribed in regulations made under this section, shall on and after the 1st day of January 1998, make application to be registered within thirty days of becoming liable to make such application.

All traders or businesses whose taxable turnover exceeds Tshs. 40 million (about Usd 25,000) per annum or Tshs. 10,000,000 (about Usd 6,250) in a period of three (3) consecutive months are obliged to apply for registration to the Commissioner for Domestic Revenue within thirty (30) days of becoming liable. Some persons and institutions are relieved from the payment of VAT on supplies or on importation of taxable goods and services, while some goods services are specifically exempted from VAT. In your case it is likely that you will have to register if you meet the above threshold amounts. If you have no VAT input, you will have a VAT credit which you can claim back.

Electronic Fiscal Device (‘EFD’) is a machine designed for use in business for efficient management controls in areas of sales analysis and stock control system. The EFD was introduced to VAT registered traders under the newly introduced “The Value Added Tax (Electronic Fiscal Device) Regulation, 2010” The law is effective from October 1, 2010 and companies that fail to comply with the requirement could face fines or closure of business.

Further the Finance Act 2012 extends the requirement to use EFD to all taxpayers subject to a power by the TRA to exempt certain persons from this requirement. The Finance Act also introduces a provision for an offence under the Income Tax Act 2004 where a person fails to acquire or use electronic devices or issue fiscal receipt or fiscal invoices. The penalty for committing such an offence upon conviction is three million shillings or imprisonment for not more than three years. Hence if you have to register for VAT, you must use the EFD. If you don’t, you may end up in jail.

Additional witnesses on appeal

In 2001 I was charged in the District Court along with others with two counts: stealing by public servant and being in possession of offensive weapons. After a hearing at the trial Court, I was found with no case to answer as opposed to my co accused. Surprisingly, the DPP appealed to the High Court and the Judge recalled three witnesses and called one new witness to hear their evidence. In the end, the High Court reversed the acquittal order and held that I had a case to answer and I should join my co accused for defence at the trial court. Was is right for the judge to hear new evidence?
KK, Dar

Under the Criminal Procedure Act, the law clearly allows any Court and at any stage of the trial to summon any person or recall any witness if his or her evidence appears to be essential to the just decision of the case. Again, the High Court is empowered when dealing with appeals from the subordinate Courts to take additional evidence (if necessary) by itself or directly to be taken by the subordinate court.

However, the High Court must record reasons for calling additional evidence and should not misuse it like turning the matter into a re-trial, filling gaps in the prosecution case or changing the nature of the case against an accused person.

We do not have Court records in our possession and hence cannot comment on whether the High Court stated reasons for calling such evidence. Your Attorneys can guide you further.

Founders of nation historical heritage

I am a Tanzanian activist who advocates for equality and fair treatment. I have noted that some residences of former leaders are given special treatment and well taken care of using public funds. Is there a law which obliges the government to preserve such places? Does the law allow public funds be used for such undertakings?
PJ, Dar

It is the duty and responsibility of the government to regulate and control the preservation, disposition and honoring or the historical heritage, documentary material and objects including tangible and non tangible things of the founders of the nation. The governing law to that effect is the Founders of the Nation (Honouring Procedures) Act.

However for clarity purposes the founders of the nation are limited to the first President of the United Republic of Tanzania and first President of Zanzibar. We are not sure if the place you are referring to is the place of the founders of the nation within the meaning of the Act. However we think there is nothing wrong in the law as the law gives effect to the preservation of our nation’s history. A nation without its own history is meaningless. You may wish to read the Nation (Honoring Procedures) Act to acquaint yourself on the regulation of the honoring procedures and preservation of historical heritage of the Founders of the nation and to provide for related matters. Such preservation is not new to other countries and respecting our founders is important.