Msaada: 5% Withholding Tax on Service and VAT Charges

[Akili Unazo!]

Wasalamu..

Kabla ya Kuning'ing'izwa na TRA needs your help.

How do w charge Withholding Tax 5% plus VAT Tax on Services rendered Invoices?

Mfano a Total Invoices in charge ya 100, 000 then do we charge 5 % Withholding Tax before VAT or We Charge VAT first?

Hisabati inahitajika hama na Utalaamu wa Kodi

 

[TaxExpert]

Wasalamu..

Kabla ya Kuning'ing'izwa na TRA needs your help.

How do w charge Withholding Tax 5% plus VAT Tax on Services rendered Invoices?

Mfano a Total Invoices in charge ya 100, 000 then do we charge 5 % Withholding Tax before VAT or We Charge VAT first?

Hisabati inahitajika hama na Utalaamu wa Kodi

Withholding tax inakatwa kwenye figure EXCLUSIVE of VAT!!

 

[Akili Unazo!]

Withholding tax inakatwa kwenye figure EXCLUSIVE of VAT!!

Mkuu fafanua zaidi nikuelewe

 

[CRICKET]

Wasalamu..

Kabla ya Kuning'ing'izwa na TRA needs your help.

How do w charge Withholding Tax 5% plus VAT Tax on Services rendered Invoices?

Mfano a Total Invoices in charge ya 100, 000 then do we charge 5 % Withholding Tax before VAT or We Charge VAT first?

Hisabati inahitajika hama na Utalaamu wa Kodi

100,000/= x 5% = 5,000/=. VAT 95,000/= x 18% = 17,100/=. Total tax 22,100/=

 

[TaxExpert]

Mkuu fafanua zaidi nikuelewe

Chukulia huu mfano;
Company A ime-contract na company B kupata service flan e.g consultancy service. Tufanye service fee ni Tshs. 1,000,000 (exclusive of VAT). Company A ndo withholding agent (the one who pays for the service offered). So according to section 83(1)(c) of the Income Tax Act, 2004(as amended), company A is required to withhold 5% of Tshs. 1,000,000 i.e Tshs 50,000 and remit it to the Commissioner General of TRA as withholding tax. So company B itapokea Tshs. 950,000.

Japo company B imepokea Tshs. 950,000 bado kisheria inakua-deemed kwamba imepokea Tshs 1,000,000. Kindly refer section 84(5) of the Income Tax Act, 2004
Thanks

 

[Akili Unazo!]

100,000/= x 5% = 5,000/=. VAT 95,000/= x 18% = 17,100/=. Total tax 22,100/=

Fo example Tax Invoice on Services let say Security Service has 500000

Then Does VAT (500000 x 18%) going to change baada ya kutoa withholding tax 5%

 

[Akili Unazo!]

Chukulia huu mfano;
Company A ime-contract na company B kupata service flan e.g consultancy service. Tufanye service fee ni Tshs. 1,000,000 (exclusive of VAT). Company A ndo withholding agent (the one who pays for the service offered). So according to section 83(1)(c) of the Income Tax Act, 2004(as amended), company A is required to withhold 5% of Tshs. 1,000,000 i.e Tshs 50,000 and remit it to the Commissioner General of TRA as withholding tax. So company B itapokea Tshs. 950,000.

Japo company B imepokea Tshs. 950,000 bado kisheria inakua-deemed kwamba imepokea Tshs 1,000,000. Kindly refer section 84(5) of the Income Tax Act, 2004
Thanks

Hence VAT will have to be based on 950000 and not 1000000

 

[Peaceforever]

Mkuu Akili Unazo umeleta issue muhimu.kwa experience yangu vat huwa inakatwa on total amount WHT ndo inafuata.kwa case hiyo inaenda kwenye 1M and not 950k.
Nami niliona km ni double taxation.wataalam wa kodi watusaidie.

 

[Peaceforever]

Maana nilidhani kwa kuwa unakata WHT kinachobaki ndo kiwe subjected na VAT.

 

[Akili Unazo!]

Mkuu Akili Unazo umeleta issue muhimu.kwa experience yangu vat huwa inakatwa on total amount WHT ndo inafuata.kwa case hiyo inaenda kwenye 1M and not 950k.
Nami niliona km ni double taxation.wataalam wa kodi watusaidie.

Ndiyo maana hapa nachanganyikiwa.

The Other Expert are Saying VAT should base on the Total Invoice Amount (1,000,000 *18% Vat) ndiyo ifuate 5% now kutokana na Mdau hapo juu anasema We should Charge 5% on the total Invoice Amount and VAT baadae Tax Expert waje watohoe

 

[TaxExpert]

Hence VAT will have to be based on 950000 and not 1000000

VAT inachajiwa kwny Tshs. 1,000,000!

 

[nyamanche]

Sikia 5% unayo withhold co yako umelipa kwa niaba ya hao walio kupa service. So ni wale wamelipa kupitia na ww utalipa vat kwenye amount yote but unatakiwa uwape update withholding certificate ya hiyo amount coz service provider watatumia kudhuhia double paiment. Point kubwa vat yako kwa amount yote na 5% withholding ni ya service provider sema ww unapokea kwa niaba ya tra..

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[trplmike]

Hence VAT will have to be based on 950000 and not 1000000

i think your correct. Manake ukicharge kwenye 1M hiyo itakuwa double Taxation
TRA njooni hapa mtoe ufafanuzi

 

[TaxExpert]

Ndiyo maana hapa nachanganyikiwa.

The Other Expert are Saying VAT should base on the Total Invoice Amount (1,000,000 *18% Vat) ndiyo ifuate 5% now kutokana na Mdau hapo juu anasema We should Charge 5% on the total Invoice Amount and VAT baadae Tax Expert waje watohoe

CALCULATION OF THE WITHHOLDING PAYMENTS
6.1 Withholding Tax Base
Tax shall be computed on the gross amount paid without deduction of expenses or allowances.
6.2 Exclusion of Value Added Tax (VAT) or Any Other Indirect Tax
The withholding tax base amount shall be exclusive of any value added tax or any other indirect tax included in the payment amount.
Example:
Where a service fee liable for the withholding tax amounting to Shs. 118 million inclusive of VAT was paid the taxable amount shall be Sh. 118 million less Shs. 18 million VAT i.e. Sh. 100 million.

Hayo ni maelezo yaliyo kwenye practice note no 01 WHT on service fees ya TRA. Nime-attach pia hyo Practice Note!

 

[lingula70]

Nenda tra

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[trplmike]

nilichoelew

CALCULATION OF THE WITHHOLDING PAYMENTS
6.1 Withholding Tax Base
Tax shall be computed on the gross amount paid without deduction of expenses or allowances.
6.2 Exclusion of Value Added Tax (VAT) or Any Other Indirect Tax
The withholding tax base amount shall be exclusive of any value added tax or any other indirect tax included in the payment amount.
Example:
Where a service fee liable for the withholding tax amounting to Shs. 118 million inclusive of VAT was paid the taxable amount shall be Sh. 118 million less Shs. 18 million VAT i.e. Sh. 100 million.

Hayo ni maelezo yaliyo kwenye practice note no 01 WHT on service fees ya TRA. Nime-attach pia hyo Practice Note!

nilichoelewa hapa ni kwamba mfano invoice charge yako ni 100000 inabidi ucharge plus 18% ya VAT
kwa hiyo jumla itakuwa 118000
lkn withholding tax unai calculate kwenye 10000 na sio kwenye 118000
5% ya 100000

 

[TaxExpert]

nilichoelew

nilichoelewa hapa ni kwamba mfano invoice charge yako ni 100000 inabidi ucharge plus 18% ya VAT
kwa hiyo jumla itakuwa 118000
lkn withholding tax unai calculate kwenye 10000 na sio kwenye 118000
5% ya 100000

Exactly!

 

[Jamiix]

Chukulia mfano mzuri, Insuarance ya gari..., Bei ni 100,000/=,ukilipa unalipa na VAT 18%,jumla inakua 118,000/=,WHT 5% itatoka kwenye 100,000/=,so insurer atabakia na 95,000/=

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[JF Member]

CALCULATION OF THE WITHHOLDING PAYMENTS
6.1 Withholding Tax Base
Tax shall be computed on the gross amount paid without deduction of expenses or allowances.
6.2 Exclusion of Value Added Tax (VAT) or Any Other Indirect Tax
The withholding tax base amount shall be exclusive of any value added tax or any other indirect tax included in the payment amount.
Example:
Where a service fee liable for the withholding tax amounting to Shs. 118 million inclusive of VAT was paid the taxable amount shall be Sh. 118 million less Shs. 18 million VAT i.e. Sh. 100 million.

Hayo ni maelezo yaliyo kwenye practice note no 01 WHT on service fees ya TRA. Nime-attach pia hyo Practice Note!

Mulemule yani.
Mkuu unaweza nitumia practice note ya jins stamp na exercise duty zinavyokaa kwenye invoice? Je zinajumlisha kwenye kucompute VAT?
Mfano.
1. Service charge 10,000. Stamp duty 500, Exercise duty 1000.
Jumla 11,500 so VAT inakuwa 18% ya 11,500?

 

[TaxExpert]

Mulemule yani.
Mkuu unaweza nitumia practice note ya jins stamp na exercise duty zinavyokaa kwenye invoice? Je zinajumlisha kwenye kucompute VAT?
Mfano.
1. Service charge 10,000. Stamp duty 500, Exercise duty 1000.
Jumla 11,500 so VAT inakuwa 18% ya 11,500?

Ukisoma section 5 ya VAT Act 2014 ina-state kwamba VAT inachajiwa kwenye VALUE OF SUPPLY/IMPORT by multiplying the VAT rate (18%) to that value.

So the question is what is the value of a supply or import?
Section 17 ina-define what is the value of supply;
17.-(1) The value of a taxable supply which is made in Mainland Tanzania shall be the consideration for the supply reduced by an amount equal to the tax fraction of that consideration.
(2) The value of a taxable supply of imported services shall be the consideration for the supply.
(3) The value of a supply that is not a taxable supply shall be the consideration for the supply.
(4) The value of a supply made without payment of consideration shall be a fair market value.

so ukisoma vizur hasa subsection 1 hapo juu, value of a supply is equal to consideration minus VAT element.

Swali la pili what is consideration?
Hii imekuwa stated in section 13;

13.-(1) For purpose of this Act, “consideration” as used in relation to a supply, means the sum of the following amounts-
(a) person, whether direct or indirectly, in respect of, the amount in money paid or payable by any in response to, or for the inducement of the supply; and

(b) the fair market value of anything paid or payable in kind, whether directly or indirectly, by any person in respect of, in response to, or for the inducement of the supply.

(2) Without limiting the scope of subsection (1), the consideration for a supply includes-
(a) any duty, levy, fee, charge, or tax including value added tax imposed under this Act that-
(i) is payable by the supplier on, or by reason of, the supply; and
(ii) is included in or added to the amount charged to the customer;
(b) any amount charged to the customer that is calculated or expressed by reference to costs incurred by the supplier;
(c) any service charge that is automatically added to the price of the supply; and
(d) any amount expressed to be a deposit paid when goods are sold in a returnable container and which may be refunded on the return of the container.
(3) The consideration for a supply shall not include a price discount or rebate allowed and accounted for at the time of the supply.
(4) An exact reimbursement of costs incurred by agent for the payer shall not form part of the consideration for the supply made by the agent to the person paying the reimbursement.

so kwenye bold hapo unaona hata duty (eg excise) or levy ina-form base ya VAT!