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Updates on the upgraded VAT electronic filing system: What you need to pay attention to

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:

There were concerns as to whether negative net amounts for the month of February will be captured in the new system. The TRA has explained that only verified negative net amounts will be carried forward to March 2022 VAT returns. If the verification process has not been completed before the new system is rolled out, the TRA should be notified in order for it to be carried forward to the upgraded system.

The current system requires the taxpayer to write to the Commissioner General to notify the occurrence of an adjusting event. Such events include cancellation of supplies, return of goods/services in full or in part, or errors in charging on the invoice. The system will now allow users to make adjustments for prior events directly, which reduces the administrative burden on both the TRA and the taxpayers side.

Input claims for invoices without verification codes

As indicated above, the new system will only accept invoices or receipts with a verification code. There was therefore uncertainty about how input VAT will be claimed for invoices without verification codes i.e TANESCO, NHC. This issue has now been addressed by including an additional form that will account for GEPG receipts as well.

Due to frequent system overloads triggered by the volume of information being uploaded into the system, there have been concerns on whether the upgraded system has the capacity to handle traffic –especially on due dates, and whether the TRA will be able to process applications on time.

The TRA has confirmed that it is continuously making efforts to acquire larger databases that can cater to the demand. In addition to this, the upgraded system has several improved features which aim to increase efficiency. For instance, the system can automatically pick on errors and highlight the areas for correction during the application process, VAT assessments are automatically generated and thus issued instantly after application and extensions can also be requested online.

  • Adoption of Virtual Fiscal Devices (“VFD”)

Although there are a few vendors that are already authorized to supply them, the TRA will officially accept VFD as a substitute for the Electronic Fiscal Device (“EFD”). The VFD is connected directly to the TRA server and all that is required is an electronic device (i.e phone, computer or POS) capable of connecting to the EFDMS System. Therefore, traders with a VFD will not need to acquire a new EFD. In the future, the cost of acquiring the VFD is said to be borne by the government however, an official statement is yet to be made to confirm the same.

  • Development of a TRA App

As the government embraces the use of technology across its operations within tax administration, the TRA intends to develop an application that will allow taxpayers to access several services from their cell phones. The application is said to allow users to verify tax clearances, product stamps and other services. This is a welcome development as it would reduce the unnecessarily long period of time taken to access basic services.

  • Additional services are set to be digitized.

Other services provided by the TRA are also in the course to be digitized. This includes vehicle registrations, driver’s license applications and renewals, and change of vehicle ownership.

Digital tax administration is inevitable. As companies embrace tax technology and automation, it is laudable that the TRA is engaging in it proactively.

That being said, transitions come with some challenges when adjusting from one system to another. For taxpayers, it is going to be important that they are proactive in adjusting to these changes so that these positive developments do not cost them. This is especially important for taxpayers with credits or repayable positions that need verification.

Linda Lyimo is a Tax Associate with Deloitte Consulting Limited. The views presented are her own and not necessarily those of Deloitte. She can be reached at