What is VAT deferment?

This is a VAT relief to importers and purchasers of capital goods by generic (classifiable under chapters 84, 85 and some of 90 under the EAC CET) to defer payment of value added tax on the capital goods upon application to and approval by the commissioner general.

The scope for goods eligible to VAT deferment has however been extended to road tractors and trailers classified under headings 87.01 and 87.16 respectively, locally manufactured or assembled in customs bonded warehouse. 

 

Conditions for VAT deferment

1. Imported goods must be capital goods by generic except for the road tractors and trailers assembled locally.
2. The importer is carrying on an economic activity that has TIN and Registered for VAT 
3. The importer engages in producing taxable supplies (at least 90% taxable supplies)
4. Keeps proper records and files VAT returns
5. Complies with obligations under VAT Act and any other tax law
6. VAT element on the imported capital goods is at least Tshs 10,000,000/=

 

Application procedure

The importer shall apply for deferment by duly filling form ITX 247.02.E (filled online in TanESW) with the following attachments:

1. Importation documents (Bill of Lading, Invoice and packing list)
2. Transfer of ownership form C 16 (For goods purchase for bonded warehouses)
3. TIN certificate
4. VRN certificate
5. VAT Returns (most recent 2 months)
6. Recent tax clearance certificate
7. Industrial/ business license/ CRB certificate