Understanding Purchase and Expense Records for VAT Returns

Tanzania is on the fast track to becoming an industrialized middle-income country by 2025. As part of this vision, the government is prioritizing the development of a robust industrial base. To support this transformation, Tanzania has set up Export Processing Zones (EPZs) and Special Economic Zones (SEZs) to drive growth in manufacturing, services, and export trade. EPZs primarily cater to manufacturing aimed at export markets, while SEZs encompass a broader range of industries, including agriculture, trade, tourism, mining, and forestry.
Tanzania offers significant fiscal incentives through its EPZ and SEZ schemes to attract both foreign direct investments (FDIs) and domestic direct investments (DDIs).

1. Original VAT Invoices for Local Purchases

Every VAT-registered business must retain original VAT invoices for local purchases. These invoices should be properly issued and include all required company details, such as the Taxpayer Identification Number (TIN) and Value Added Registration Number (VRN). A valid VAT invoice serves as the primary evidence for claiming input tax credits and demonstrates compliance with VAT regulations.

2. Customs Documentation for Imports

If your business imports goods, the associated customs documentation must be included in your VAT returns. This includes documents with valid TANSAD (Tanzania Single Administrative Document) assessment numbers, which are essential for verifying import duties and taxes. Filing these within the prescribed timelines, as outlined in Section 69 of the VAT Act 2019 RE, ensures that your returns are complete and accurate.

3. Exempt and Non-Creditable Purchases

In addition to standard purchases, businesses must also track and file details of exempt and non-creditable purchases. This includes goods and services that do not qualify for input tax credit, such as certain capital expenditures, administrative costs, and specific non-business-related expenses. While these may not be claimable for VAT purposes, they still need to be reported as part of your comprehensive VAT records.