Relief to Government Entities as VAT exemption is enhanced on local supplies

Relief to Government Entities as VAT exemption is enhanced on supplies!

Since the passing of the Government budget and Finance Act 2017, which came into force in July 2017, there have been a number of supplementary legislations passed by the Parliament with the aim of enhancing control and compliance, ensuring maximum collection of revenues, securing public interests and boosting investment levels in Tanzania. These amendments targeted the mining, petroleum, income tax, insurance and the Value Added Tax Acts.

In an active movement of poverty eradication in the country, light is cast on the hurdles facing investors in the country and the government is also keen at controlling government expenditure while maximising its revenue. The Government has finally taken stand on the tropical discussion of the process of obtaining VAT exemption in Tanzania.

The key concern for many investors intending to invest in Tanzania, is availability of tax incentives (including VAT incentives). One of the passed supplementary legislations was The Written laws (Miscellaneous Amendments) (No.3), Act, 2017, which introduced the changes in the VAT Act, 2014. The changes relate to VAT exemption on local supplies (goods or services) made to government entities, and if such local supplies are used to implement government projects, funded by either the Government or concessional loan or grant. This may be through agreements between the Govern of a concessional loan and provided that, such agreements provide for value added tax exemption on such supplies.

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