What is a VAT refund?
Money paid back to the trader. A taxable person will be entitled to a refund of VAT when in a particular prescribed accounting period when his tax liabilities are not exhausted by allowable deductions or where its returns for prescribed accounting periods regularly result in excess credits. The refund once is processed is paid to the taxpayer through Interbank Settlement System (TISS) or through his or her bank account.
A taxable person may apply for a refund where a person has over paid a net amount payable for a tax period, the application may be logged through form VAT ITX260.02E accompany with:
- Certificate of genuineness
The certificate of genuineness referred to under VAT regulation shall be issued by an auditor who has been registered by National Board of Accountants and Auditors and who is registered as a tax consultant with Tanzania Revenue Authority
- Computation of the refund amount;
a. Checklist for the applicant’s value added tax repayment.
b. And any other information as Commissioner General may require.
Upon receipt of the refund claim the Commissioner General make decision on the application on the basis of the information provided without under takeng an audit or investigation, and shall
Within ninety days of it receipt makes decision on the application and informs the applicant on the amount to be refunded, and the period upon which such a refund shall be made.
VAT REFUND DIPLOMATS AND INTERNATIONAL BODIES
Application for refund to diplomats and international bodies shall be made to the Commissioner General in form ITX 262.02.E
For the purpose of justifying diplomatic status or status of an international body; the application should be endorsed by the Ministry responsible for foreign affairs and international cooperation.
Be accompanied by tax invoices related to the taxable supplies on which refunds claim is made.
Can the VAT refund be offset against the unpaid tax?
Yes. Any refund may be offset against other taxes, penalties and interest owing to Tanzania Revenue Authority by the taxable person, but the Commissioner General shall inform the taxable person in writing.
Is interest payable on the delayed refunds?
Yes. Refunds must be made within 30 days after the due date for lodgment of the return for the last prescribed accounting period in the half year or receipt of the last outstanding tax return due for any prescribed accounting period falling within that half year, whichever is later unless the Commissioner believes there is a revenue risk. For regularly repayment traders, refunds will be made within 90 days after the due date for lodging the return for the prescribed accounting period, or the date of receipt of the return, whichever is later.
Where the refund is not made within this period, interest is paid to the taxable person at the commercial bank lending rate determined by the Central Bank
What are the requirement for a VAT refund be effected?
A VAT refund, cannot be affected unless the applicant has submitted among others the following documents and or attachments:
1. Certificate of genuineness issued by an auditor who has been registered by NBAA and who is registered as a tax consultant with TRA.
- A checklist of details of issues regarding the refund application must be properly filled and completed by the applicant.
- For a case of Regularly Repayment traders the following documents are vital to be submitted
- Single Bill of Entry
- Bill of Lading
- Airway bill
- Road consignment note
- Landing certificate
- EFDs receipts/invoices
- Brief working from the auditor as to how the claimed amount has been arrived at including the summary of purchases and sales
NOTE: Input Tax shall not be deducted /credited after six months from the date of the tax invoice/EFDs receipts.