Attachment J.6. Updated Value Added Tax Allowability Guidance.pdf
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- Attached to
- Tuhifadhi Maliasili Activity Federal contract opportunity
- Solicitation number
- Sol_72062120R00003
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This guidance document from USAID/Tanzania updates allowability procedures for value added tax (VAT) reimbursement claims from implementing partners. VAT reimbursement costs may be deemed allowable by USAID if the implementing partner has submitted claims to the Tanzania Revenue Authority (TRA) or USAID at least six months prior and demonstrates diligent pursuit of reimbursement using proper forms and procedures. Implementing partners must receive written approval from their agreement officer prior to claiming any VAT expenses and notify the agreement officer of any reimbursements received from the Government of Tanzania. The guidance also addresses potential programmatic impacts from expending funds on VAT reimbursements and reminds implementing partners of their responsibility to obtain exemptions and pursue relief as effectively as possible in accordance with TRA guidance.
The federal contract opportunity is for the Tuhifadhi Maliasili activity to address barriers to habitat connectivity and biodiversity conservation in Tanzania. The activity will support government and civil society capacity building for conservation and natural resources management through increasing private sector engagement, building public sector and civil society capacity, and strengthening conservation and management policies and regulations. The solicitation was issued by USAID Tanzania.
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Text version
Office of Acquisition and Assistance (OAA)
OAA-IP Notice: 2020-01 January 06, 2020
TO: All USAID/Tanzania Implementing Partners
FROM: Ayana Angulo, Director, OAA/Tanzania
SUBJECT: Updated Value Added Tax Allowability Guidance
USAID/Tanzania is aware of the continual challenges Implementing Partners (IPs) are facing due to the changing Value Added Tax (VAT) exemption and refund procedures set forth by various laws, regulations, and circulars. This document provides guidance and updates the procedures laid out in USAID/Tanzania IP Notice 2018-04 dated May 25, 2018.
Per IP Notice 2018-04, VAT claims gone unpaid by TRA may be deemed allowable costs by USAID/Tanzania. This remains true, but since VAT claims are now to be routed through USAID before going to the Ministry of Foreign Affairs and TRA, the guidance from 2018 must be updated.
VAT reimbursement costs may be deemed allowable provided that the following criteria is met:
● the reimbursement claim was submitted to TRA or USAID/Tanzania 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 or USAID/Tanzania VAT points of contact.
The AO/CO will make the allowability determination on a case-by-case basis. IPs must receive written approval from the AO/CO prior to claiming any VAT expenses under an award.
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.
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.
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