On 4th February 2022, the Tanzania Revenue Authority (“TRA”) released a notice informing taxpayers that from 1st March 2022, an upgraded e-filing system of VAT returns will be rolled out. The upgraded e-filing system is set to address most of the shortcomings of the existing system and enhance user experience which will in turn encourage voluntary compliance and increase efficiency. Following the announcement, sensitization has been done by the TRA to create awareness about the new system and clarify on some issues that the announcement left unanswered.
Unlike the old system, users will only be able to file a VAT return if all previous returns have been filed. VAT-registered traders are also required to upgrade their EFD machines to Protocol 2.1, in order to be able to issue invoices with verification codes. Invoices issued outside the 2.1 system will not be recognized by the new E-filing system. A detailed user manual is expected to be released in the coming weeks to help users navigate the upgraded system.
This is no doubt a welcomed development. Not least because it brings the taxpayer experience in Tanzania closer to a single window approach where all their tax matters (including tax assessments, tax debts as well as credit information for taxes) will be accessible through a unified portal. The TRA has indicated that the upgraded template includes a separate sheet for taxable imported services, deferred capital goods and bank interest. The system is also equipped to verify TANSAD numbers to determine whether they have been cleared by customs, claimed or expired.
One cannot underplay the recent transformation that TRA has undergone with respect to the use of technology to improve tax administration. In a recent sensitization drive, the TRA has addressed some of the key concerns highlighted here below: