Reverse VAT on Import of Services

SRA

How to Apply Reverse VAT on Import of Services While Filing VAT Returns in Tanzania

If your business in Tanzania imports services from a foreign supplier, you are required to account for Reverse VAT (Value Added Tax). This is a legal obligation and a common compliance point during monthly VAT return filing. In this guide, we’ll explain how to apply Reverse VAT on imported services when filing your VAT return with the Tanzania Revenue Authority (TRA).

📌 What is Reverse VAT?

Reverse VAT is a mechanism where the importer of services (you, the Tanzanian buyer) accounts for VAT on behalf of the foreign supplier who is not VAT-registered in Tanzania. This typically applies to:

  • Consultancy services
  • Digital or software subscriptions
  • Design or engineering services
  • Marketing or online services provided from abroad

✅ Who Must Apply Reverse VAT?

You are required to apply Reverse VAT if you:

  • Are VAT-registered in Tanzania
  • Import services from a non-resident supplier
  • Use those services for business purposes in Tanzania

📝 How to Apply Reverse VAT When Filing VAT Returns

Follow these steps when submitting your monthly VAT return on the TRA VAT eFiling Portal:

Step 1: Calculate the Reverse VAT

Use the standard Tanzanian VAT rate of 18% on the invoice amount. For example:

If the invoice value is USD 1,000 → VAT = USD 1,000 × 18% = USD 180

Step 2: Enter in Your VAT Return

  • Go to the “Imports of Services” section of the return
  • Enter the gross value of the imported service
  • Report the calculated VAT as Output Tax on Imported Services
  • If eligible, enter the same amount under Input Tax

Step 3: Upload Supporting Documents

  • Attach the foreign supplier invoice
  • Provide proof of payment
  • Apply the correct exchange rate (as per Bank of Tanzania)

Step 4: Submit and Retain Records

File your return by the 20th of the following month. Always retain all documentation for future audits.

⚠️ Common Mistakes to Avoid

  • Ignoring Reverse VAT on services like Zoom, Google Workspace, or foreign consultants
  • Claiming Input VAT when the service supports exempt supplies
  • Omitting supporting documents or using the wrong exchange rate

✅ Summary

Correctly applying Reverse VAT on imported services in Tanzania ensures your business remains compliant and avoids penalties. Always:

  • Declare VAT under Output Tax
  • Claim Input Tax only when allowed
  • File on time via the TRA eFiling Portal

Need professional help with your returns? Contact a certified Tanzanian tax consultant or email us for assistance.

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