TRA Public Notice On Electronic Fiscal Devices With Protocol 2.1 Software

• Published date: 16 December 2020
• Subject Matter: Tax, Income Tax, Sales Taxes: VAT, GST
• Law Firm: Bowmans
• Author: Ms Asha-Sabrina Ayub

In Mainland Tanzania, suppliers of goods and services whose annual turnover is TZS 14 million or more are required to issue receipts (or invoices) through Electronic Fiscal Devices (EFDs), known as fiscalised receipts (or fiscalised invoices).

The Value Added Tax Act 2014 also requires VAT registered persons wishing to claim input value added tax (VAT) on their local purchases to be in possession of fiscalised invoices/receipts at the time of recording these claims in the VAT returns.

The Tanzania Revenue Authority (TRA) has issued a Public Notice (Notice) dated 7 December 2020, requiring suppliers of goods and services to either acquire new EFDs or upgrade their current EFDs to be in line with Protocol 2.1 software before 6 January 2021.

What the notice communicates

According to the notice, the TRA is in the process of upgrading its electronic filing (e-filing) system for VAT returns as well as improving the Electronic Fiscal Devices Management System (EFDMS) which involves the introduction of new software; namely Protocol 2.1.

Following this change, fiscalised receipts/invoices issued through certain EFDs not running on Protocol 2.1 will not be able to pass the automatic verification test within the new e-filing system.

Therefore, the notice requires suppliers of goods and services with EFDs that cannot be upgraded to Protocol 2.1 software to acquire new devices with Protocol 2.1 capacity.

Timeline

The notice requires suppliers to acquire the new EFDs within 30 days of the date of the notice (i.e. by 6 January 2021). Upon expiry of the 30-day deadline, the usual EFD non-compliance fine will apply as set out in the Tax Administration Act 2015.

This is a tight deadline for businesses given that:

• EFD machines carry an upfront cost (for some models over TZS 2 million (c. USD 870), depending on the supplier), which may be set-off in future (see below) but may incur a cash-flow issue for smaller businesses; and
• it may take some to configure or link these devices with suppliers' ERPs/accounting software systems where applicable.

Way forward

The steps to be taken to comply with the Notice are:

• if a taxpayer's existing EFD device is not capable of being configured to the Protocol 2.1 software, they must acquire a new device from the list of approved suppliers of EFDs before 6 January 2021. Where a new EFD is acquired, the old device should be submitted to the TRA; or
• if a taxpayer's existing EFD device can use the Protocol 2.1 software, the supplier should...