TRA Clarifies on 18 PC VAT on Bank Transactions

The Tanzania Revenue Authority (TRA) yesterday gave clarification on the 18 percent Value Added Tax (VAT) on bank transactions saying the amount is levied from the set transaction fees. The TRA Principal Research Officer, Mr Beldom Chaula, told reporters yesterday that there has been confusion among the public on the said 18 percent VAT.

Mr Chaula was speaking during a news conference at the TRA headquarters. He said some people have been misleading the public saying 18 percent VAT on financial transactions will be charged from the amount that is withdrawn or deposited by customers. Instead, the TRA official said, VAT is charged from the set transaction fee.

"TRA does not charge tax from bank’s transactions or interests, the 18 per cent VAT is imposed on the transaction fee and not the whole deposited or withdrawn amount,” he explained.

He cited an example, saying if a customer is charged 300/- by the bank for withdrawing 3m/-, then TRA imposes 18 per cent VAT on transaction fee, which is 300/- and not 3m/-.

Mr Chaula also noted that TRA had experienced challenges on the collection of tax imposed on transit cargo as there has been confusion among members of the public on the tax imposed on international transport services. He said the charges include stevedoring, lashing and security charges.

Stevedoring are charges on loading or off loading the cargo from a ship, while lashing consists of securing a loaded container aboard a vessel by means of bars, bridges or rods to the whims of the captain.

“The government is collecting tax on auxiliary services, which include stevedoring, lashing and security charges, these charges are imposed on services that are provided within the country,” he said.

On the tourism services, Mr Chaula said the government has already started collecting tax imposed in the sector. He said so far TRA has not come across difficulties on collecting tax from tourism business operators.

“The government has introduced VAT on tourism services in the country from July 1, this year, so far, we have not received any confusing report from the sector,” he said. According to Mr Chaula, TRA is doing everything in its capacity to collect tax and that the public must support the move for the country’s better future.

“We are asking the public to support TRA and the government’s efforts in general, we must strive to collect revenues to finance various development projects,” he added.

Culled from Daily News