Attachment J.7. Value Added Tax Allowability Guidance.pdf
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- Attached to
- Tanzania Vector Control ActIvity (TVCA)
- Solicitation number
- 72062119R00001
About this file
This memorandum from USAID/Tanzania provides guidance to implementing partners on allowable value added tax reimbursement claims. It informs partners that unpaid VAT reimbursement claims submitted to the Tanzania Revenue Authority at least six months prior may be deemed allowable costs and charged to awards, provided the partner has diligently pursued reimbursement using proper forms and procedures. The partner must provide documentation of reimbursement requests to USAID and obtain approval from the agreement or contracting officer for allowability on a case-by-case basis. While continuing reimbursement efforts with the TRA, any VAT costs charged must be considered programmatic and partners should coordinate with USAID if negative programmatic impacts are foreseen, such as decreased implementation time. Partners are also encouraged to seek VAT exemptions directly from the TRA when possible according to the guidelines in Attachment 1. The memorandum reminds partners that obtaining exemptions and reimbursements is their responsibility and to comply with all award tax reporting requirements, directing any questions to the assigned assistance specialist.
Attachment J.7. Value Added Tax Allowability Guidance
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Office of Acquisition and Assistance (OAA)
OAA-IP Notice: 2018-04
May 25, 2018
TO: All USAID/Tanzania Implementing Partners
FROM: Ayana Angulo, Director, OAA/Tanzania
SUBJECT: Value Added Tax Allowability Guidance
USAID/Tanzania is aware of the challenges Implementing Partners (IPs) have faced due to changing requirements for Value Added Tax (VAT) exemptions and reimbursements since the 2014 VAT Act took effect and pushed implementing partners toward VAT reimbursement rather than up-front exemptions. Despite diligent efforts to comply with the changing requirements, most IPs have been unable to obtain exemptions or receive reimbursements since early 2016. In order to assist the IP community with this financial burden, the memorandum provides guidance for outstanding VAT reimbursement claims associated with USAID awards.
Going forward, USAID/Tanzania may deem unpaid VAT reimbursement claims to be allowable costs and permit them to be charged to awards provided that the following criteria are met:
● the reimbursement claim was submitted to TRA at least six (6) months prior to seeking reimbursement from USAID or applying advanced funds to cover VAT expenses;
● the IP shows that it has diligently pursued reimbursement, including using proper forms and following the procedures outlined by the TRA;
● the IP provides to their Agreement/Contracting Officer Representative (AOR/COR) and Agreement/Contracting Officer (AO/CO) a copy of all reimbursement documentation sent to TRA.
The AO/CO will make the allowability determination on a case-by-case basis.
If an unreimbursed VAT claim is determined to be allowable and charged to an award, the IP must nevertheless continue to seek reimbursement from TRA. If and when reimbursement is received from the Government of Tanzania for VAT paid by USAID, IPs are required to notify their AO/CO and request instructions on what to do with the reimbursement.
VAT reimbursement claims charged to USAID awards are programmatic costs not originally budgeted. As such, IPs should inform their AOR/CORs if they foresee any programmatic impacts associated with expending program funds for VAT reimbursements (i.e. decrease in months of implementation). Prompt coordination between USAID and IPs will help to minimize any negative programmatic effects.
Because of the difficulty in pursuing VAT reimbursement, IPs are encouraged to seek upfront
VAT exemptions pursuant to section 2(b) of TRA Operational Circular No. 4 of 2015 (VAT
Exemptions to Projects Funded by Foreign Government Institutions Having Agreement with the Government), when practicable. (See Attachment 1). Per Operational Circular No. 4, activities funded by USAID remain eligible to seek and obtain VAT exemptions on local purchases.
USAID/Tanzania reminds IPs that it is their responsibility to seek and obtain VAT exemptions and reimbursements, and strongly encourages IPs to work with competent local counsel to make sure that the IP is following the most up to date TRA guidance and pursuing
VAT relief as effectively as possible.
Additionally, IPs are reminded to adhere to all tax reporting requirements found in their awards.
For any questions regarding this guidance, please contact the Acquisition and Assistance
Specialist associated with your award.
| 2018-05-25T13:53:23+0300 | |
| Ayana Angulo |
File details come from the government source that posted it. Updated .