Tanzania Benchmarks on URA's VAT Exemption Mechanisms

Officials from the Tanzania Revenue Authority (TRA) are currently attending a five-day benchmark at the URA headquarters to understand the legal framework of URA’s VAT exemption. During the visit, the officials will learn about the process of applying for VAT exemptions, deemed VAT automation using the East Africa Crude Oil Pipeline (EACOP) project tax incentives automation as a case study, and the eligibility of VAT exemption beneficiaries to claim refunds of input tax credit.

Kabagonza Daphine, the acting supervisor of Midstream, shared with the team the Legal framework under which deemed VAT operates. “We have the inter-governmental agreement, the host government agreement, the EACOP Act, and Ugandan laws that provide for deemed VAT. All these aid us in the management of deemed VAT’s application and approval.”

The acting Assistant Commissioner of Business Policy Charles Mua appreciated the TRA team for choosing to benchmark on URA, saying it was an opportunity to exchange ideas on VAT exemptions as VAT is a multi-stage tax.

In his remarks, Robert Rutajama, the manager of Tax Exemptions, Legal Services Department at TRA, said that VAT was introduced in Tanzania in 1998 and the threshold is TZShs200 million. He commended URA’s mechanism of using quantity surveyors to determine how much material is required for construction, thus benefiting from deemed VAT and VAT exemptions.