Contents - Tanzania Revenue Authority

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PART SEVEN 7.0 TYPES OF TAXES AND HOW TO CALCULATE THEM 7.1 VALUE ADDED TAX (VAT) VAT is a consumption tax charged by VAT registered traders on all taxable goods and services at a standard rate of 20%. The VAT is a multistage tax levied at each stage of production and distribution up to the retail stage. The tax is also levied on taxable imports made by persons whether or not registered for VAT. All traders whose taxable turnover exceeds TZS 40 million per annum (for <strong>Tanzania</strong>n Mainland) and TZS 20,000,000 (for Zanzibar) are obliged to apply for VAT registration to the respective Commissioners in their respective Tax <strong>Authority</strong>. They are also required by law to keep records and books of accounts of their business. (a) VAT ACCOUNT This shows, on one hand, a brief report of tax collection on sales and any changes in tax collection and on the other hand a brief report of taxes paid on purchases and any changes made in taxes, which were paid. Thus the actual VAT paid or remitted shall be realized. You are supposed to keep VAT brief reports within the period of VAT returns. Add the columns of VAT in your books of account regularly, say weekly, and the sum should be written in briefs under the following headings:- Table no: 2 VAT ACCOUNT S/N VAT ON PURCHASES VAT ON SALES 1. Internal purchases Sales 2. Imports of goods Goods for personal use 3. Errors of previous returns Errors on previous returns Total Total 23
At the end of each tax period add the figures on each heading and insert them on your VAT returns. (b) HOW TO CALCULATE VAT ON SALES If VAT is inclusive in the sales of goods or services, the result is a “price that includes VAT”. The VAT fraction is r , where r = tax rate. (r + 100) Using VAT tax rate of 20%, VAT on sale and purchase can be obtained by using the VAT fraction 20/120 of the VAT included price. Example 1 BAHATI bought goods worthy TZS 1,200/=, VAT included. The value of VAT can be determined as follows: - By using the VAT fraction VAT : 20 x 1,200 = TZS 200/= 120 The actual value of goods shall be obtained by subtracting VAT from the gross values of goods, i.e. Actual Value of goods = Value inclusive of VAT – VAT = TZS 1,200 – TZS 200 = TZS 1,000 Therefore: • VAT on goods shall be TZS 200 • Actual value of goods is TZS 1,000 Example 2 How to calculate VAT on goods or services that are VAT exclusive . BAHATI is an entrepreneur of a whole sale shop, who is VAT 24
Page 3 and 4: CONTENTS PREFACE . . . . . . . . .
Page 5 and 6: administration, management skills w
Page 7 and 8: SN BUSINESS TYPE NO. OF EMPLOYEES B
Page 9 and 10: • Sole proprietorship • Partner
Page 11 and 12: offence and upon conviction the lic
Page 13 and 14: Schemes. PART TWO 2.0 DEVELOPING YO
Page 15 and 16: PART THREE 3.0 DEVELOPING A SUCCESS
Page 17 and 18: (b) Opportunities • External capi
Page 19 and 20: PART FOUR 4.0 EFFECTIVE SALESMANSHI
Page 21 and 22: • Attract customers to buy at fir
Page 23 and 24: GOODS (c) Running Cost • Avoiding
Page 25 and 26: have obtained from this training.
Page 27: 6.3 TYPE OF RECORDS There are many
Page 31 and 32: enter into the country for example,
Page 33 and 34: Computation of duty and tax will be
Page 35 and 36: Example 5 Calculations Duty/Tax Typ
Page 37 and 38: • Income from business A person
Page 39 and 40: Allowable costs (i) Salaries and re
Page 41 and 42: (ii) Partnership Under a partnershi
Page 44: To pay tax voluntarily is an act of

Contents - Tanzania Revenue Authority

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