THE INSTITUTE OF FINANCE MANAGEMENT

FACULTY OF BUSINESS AND ECONOMICS

DEPARTMENT OF ECONOMICS AND TAX MANAGEMENT

BACHELOR OF ACCOUNTING, YEAR II

(BAC II)
ACU 07425 – ADVANCED TAXATION
TUTORIAL QUESTIONS
ACADEMIC YEAR 2024/2025

SECOND SEMESTER MARHC 2025 – JULY 2025

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GENERAL INSTRUCTIONS:
1. There are 20 Questions in this paper.
2. The model of attempting the questions and any discussion thereof will be provided by your
tutor(s) during tutorial sessions.
3. Each student should attend tutorial sessions as scheduled and allocated in the teaching timetable.
4. Any justification for failure to attend the session should be self-communicated to the tutor
by the absentee.

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QUESTION ONE
a) Define Value Added Tax (VAT). Explore the classification of Value Added Tax (VAT), with
their relevant examples
b) Describe the historical background of Value Added Tax (VAT). Identify the reasons for
introducing Value Added Tax (VAT) in Tanzania.
c) Illustrate how Value Added Tax (VAT) operates?
d) Value added tax (VAT) is considered to be the modern innovation of tax systems in twentieth
century. Most Governments introduced VAT to replace Gross Sales Tax (GST) which was
perceived as inefficiency and having economical distortion. With vivid examples assess the pros
and cons of Value Added Tax (VAT).

QUESTION TWO
a) Examine the imposition and exemptions of Value Added Tax (VAT) in Tanzania as per Value
Added Tax Act, Cap. 148, R.E 2023.
b) Value Added Tax (VAT) is imposed on taxable imports and payable by the importer, and in case
of supply of imported services the purchaser is liable to pay the Value Added Tax (VAT)
therein. Breakdown the imposition of Value Added Tax (VAT) on imports.
c) Discuss the rationale of exempting goods from value added tax
d) Discuss three types of VAT bases

QUESTION THREE
Registration for VAT purposes is a mandatory obligation by any eligible person in the United
Republic of Tanzania, as required under the Value Added Tax Act, Cap. 148, R.E 2019 (Section 28 –
43). And failure to notify the Commissioner General on the attainment of Registration Status is
punishable under the tax laws. Required;
a) Describe the types of VAT registration for all categories of persons, and the necessary conditions
that a person may be deregistered for VAT purposes.
b) Write short notes on the following;
i. VAT registration threshold
ii. Intending trader
iii. Partially-exempted trader
iv. VAT single registration
v. Registered person
vi. Supply
vii. Outside the scope supply
viii. Taxable supply
ix. Exempt supply
x. Zero-rated supply
xi. Taxable person
xii. Tax fraction
xiii. Tax period
xiv. Time of supply

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 c) After a letter of engagement was signed on 20th November 2021, a taxable person received an
advance payment equal to 60% of the total payments from her client. This payment was received
on 30th November 2021 for the one-day consultancy assignment which was rendered on 5th
December 2021. The final payment was affected on 20th December 2022 after a full report was
dully submitted to the customer.
Required:
i) Based on the above scenario, what is the tax point for Value added Tax (VAT) purpose?
ii) Briefly explain the significance of determining tax point from both consultant and client
perspectives

QUESTION FOUR
a) MIKITO TRADERS is a VAT registered person since March 2020. The business had the
following information for the month of January 2023:
Sales TZS 45,050,000 (VAT Exclusive)
Purchases TZS 40,400,000 (VAT Inclusive)

i) The amount of VAT payable or refundable for the month of January 2023.
ii) If in February 2023 the business had a VAT refund of TZS 1,250,000; how much will be paid
by the business to TRA on or before 20/03/2023?

b) From (a) above, if in January 2023 the sales figure was VAT inclusive, purchases were VAT
exclusive and in February 2023 had the amount of VAT payable of TZS 750,000. Determine:
i) Amount of VAT payable or refundable for January 2023.
ii) How much will be paid to TRA as VAT on or before 20/03/2023?

c) Manga Ltd is a taxable person whose last month VAT Return showed TZS 30,000,000 VAT
payable. Her taxable standard rated purchase was TZS 9,600,000 including VAT.
Required:
Calculate the total taxable sales (VAT exclusive) made in that month. Assume she sells only
taxable supplies.

QUESTION FIVE
a) Explain the four types of non-creditable input tax
b) What are the conditions required for the VAT registered trader to claim for excess credit?
c) The Value Added Tax Act, Cap. 148, R.E 2019 gives the Commissioner the power to require a
taxable person to keep any records that may be required in order to verify that the correct
amounts, output tax and input tax have been recorded in the VAT return of any accounting
period.

Required:
i) Differentiate Output tax from Input tax
ii) State the accounting records and books which the trader has to keep for VAT purposes.

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QUESTION SIX
a) Mivinjeni Supermarket Ltd is a Value Added Tax registered operator and carries on the business
of supermarket on a cash basis. The company’s records show the following income and
expenditure for the month of December 2024

TZS TZS
Cash Sales
General goods 170,000,000
Maize meal and Sorghum for human consumption 28,000,000
198,000,000
Opening stock 300,000,000
Purchases for cash and on credit
General goods 120,000,000
Maize meal and sorghum for human consumption 20,000,000
440,000,000
Closing stock 280,000,000 160,000,000
Gross profit 38,000,000
Expenditures;
Advertising 2,000,000
Rent of premises 5,000,000
Salaries 18,000,000
Other expenses (subject to VAT) 6,000,000 31,000,000
PROFIT for the month 7,000,000

Required:
i) Determine the VAT payable or VAT refund for the month of December 2024 for Mivinjeni
Supermarket Ltd.
ii) State the due date for submission of the VAT return and payment of the VAT due for
December 2024
b) The operation of VAT system depends very much on declaration made by VAT registered person
that is done on monthly basis. To ensure compliance from registered taxpayers, the Value Added
Tax Act, Cap. 148, R.E 2019 does not provide for punitive measures for the person who does not
comply with the law. What measures are taken against a person who fails to submit a return or to
pay tax within the time allowed under the law?
c) XYZ is a registered taxpayer that submitted a VAT return for June 2024 on 30th October 2024
with the payment of TZS 650,000 as VAT payable. The prevailing rate of interest was 10%.
Compute Interest, Penalty and final tax liability from the above information.

QUESTION SEVEN
Nyants General Supplies Ltd is a coconut oil processing company located at Kisarawe, and is
registered for Value Added Tax (VAT). The company entered into the following transactions in
the month of February 2024.
i. Sold taxable supplies to customers as follows: Sales to VAT registered customers

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 ii. Bought a brand-new passenger minibus (Hiace) from Toyota at a cost of TZS. 32,500,000.
iii. Bought stationeries worth TZS. 650,000 from suppliers who are not registered for VAT.
iv. Entertain major customers at a local hotel at a cost of TZS. 2,460,000
v. Bought coconuts from local farmers at a cost of TZS. 12,500,000
vi. Paid for electricity and telephone at TZS. 321,400 and TZS. 441,000 respectively.
vii. A consultant on production process was hired from South Africa. The consultant has no
local office as a result he is not registered for VAT. He invoiced TZS. 16,500,000 for the
services offered. The consultant did not charge any VAT as the supply falls outside the
scope of South African VAT chargeability.
viii. Received a deposit on sale of taxable supplies to a customer amounting to TZS. 4,650,000
Unless specifically stated, all the above persons are registered for VAT and transactions are stated
exclusive of VAT
Required: Calculate the VAT payable or any excess carried forward (refund) for the period ended on
28th February 2024.

QUESTION EIGHT
Camara Spiderman Limited (CSL) is a dealer of various products in Mutukula area. The July business
transactions are given in the following information:

Sales/Purchases TZS.
Sales of processed water 680,000
Retail taxable sales 56,000,000
Sale of maps and education books to a secondary school 400,000
Sales to Uganda (exports) 15,000,000
Transportation of cows 150,000
Importation of consultancy services from Uganda 12,000,000
Purchase of beer and alcohol 25,000,000
Purchase of processed water 300,000
Purchase of eggs 200,000
Paid electricity bill 1,350,000
Payment of salaries 25,000,000

Note:
1. Out of the purchased alcohol, TZS.3,000,000 was for employees use.
2. Included in the retail sales is sales of fresh fish amounting to TZS.10,000,000.
3. The consultancy services were charged 16% VAT in Uganda.
4. All transactions were priced VAT exclusive.

REQUIRED:
Basing on the provision of the Value Added Tax Act, Cap.148, compute the deductible input tax and
VAT Payable/Repayable for the month.

QUESTION NINE
The following information concerning the consignment of India khanga imported by Dar-es-salaam
based Tanzanian importer and dealer of India khanga. He submitted the detailed invoice to Dar es

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salaam Customs Center for the purposes of computation of customs duties and taxes. The direct payment
made by importer to the Indian supplier was USD 10,000. He also paid USD 5,000 to the third party to
fulfill the instruction of the supplier. The following costs were not included in the price actually paid or
payable.

i. Selling commissions USD 200

ii. Buying commissions USD 100
iii. Cost of containers/parking USD 200
iv. Assist in the form of yarn USD 200
v. Cost of transport to Dar USD 1,200
vi. Cost associated with transport to Dar USD 200
vii. Insurance Cost to Dar USD 500

The Bank of Tanzania (BOT) rate of exchange is as follows;

Buying rate 2,309 TZS/USD
Selling rate 2,339 TZS/USD

Required
i. Determine the price actually paid or payable
ii. Determine the customs value according to transaction value method

QUESTION TEN
a) Differentiate between prohibited goods and restricted goods as provided under EACCMA, 2004
(R.E 2009), give five (5) examples on each.
b) Briefly explain any five (5) conditions for customs auction sales as provided under EACCMA
Regulations.
c) A taxable person may deduct from output tax any value added tax chargeable on goods and
services purchased in Tanzania or imported into Tanzania, used wholly, exclusively and
necessary in the course of business.
Required:
Explain any five (5) circumstances where input VAT is not claimable.

QUESTION ELEVEN
a) Briefly explain six customs valuation methods under Agreement on Customs Valuation
(ACV) Model.
b) Define the term smuggling and describe various powers vested to the proper officers for the
purpose of prevention of smuggling under EACCMA, 2004 (R.E 2009)
c) Double taxation relief methods are normally applied where the country of residence acts to
prevent or reduce the extent to which its residents are taxed more than once. There are many
different systems in use for achieving this end.

Required:
Briefly explain three main methods by which country may give relief for double taxation.

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QUESTION TWELVE
Mr. Chino imported a motorcar from Japan on 12th June 2019. The cost of the car in Japan was USD
2,500 and insurance paid on freight was USD 100 and freight charges paid amounted to USD 1,800. The
car arrived in the country on 12th August 2019. On 28th August 2019, Mr. Chino paid all the taxes on
importation. He also paid port charges amounted to USD 215 being storage and handling charges.
Required:
Assuming the exchange rate was TZS. 2,339/USD, Import Duty and Excise Duty rates were 25% and
10% respectively.
a) State what is the Time of Supply of this importation?
b) Compute the Taxable Value of the car for VAT purpose.
c) Calculate the VAT paid on importation.
d) Determine the total Taxes and Duties paid on Importation of this car.

QUESTION THIRTEEN
Bob Commission Agent is dealing with the importation of used vehicles from Japan and selling at a
commission of 20% of the total cost of the respective vehicle. Bob
Commission Agent imported a saloon car with 2,000cc on 1st January 2020; the car was manufactured
since 1st January 2005. This car is now selling at TZS. 18,000,000.
The tax rates for this car at the time of importation were: Import Duty 25%, Excise Duty due to age
15%, Excise Duty due to engine capacity (cc) 5% and VAT 18%. The exchange rate at the time of
importation was TZS. 2,339/USD.
Other customs duties payable to Customs Department including wharfage charges which is 50% of the
CIF.
Required:
Determine all duties/taxes paid to Tanzania Revenue Authority with respective to this vehicle at the time
of importation.

QUESTION FOURTEE
Mr. Tosha imported Toyota VANGUARD SUV (2007) from Japan. The motorvehicle (petrol engine)
has an engine capacity of 3,500cc. The customs value was USD 5,767.00, and Mr. Tosha paid the
following duties/taxes; (Use Exchange rate - TZS. 2,339.0/USD)

Import Duty USD 1,441.75

Excise Duty USD 720.88
Excise Duty due to age USD 2,162.63
VAT USD 1,881.90
Customs processing fee USD 34.60
Railway Development Levy USD 86.51
Vehicle Registration Fee TZS. 550,000
Required:

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 a) Compute total import taxes paid (in Tanzanian Shillings)
b) Find the rates (in percentage) for each of the following: Import Duty, Excise Duty, and
Excise Duty due to age, VAT and Railway Development Levy.

QUESTION FIFTEEN
a) Tax avoidance is one of the approaches used by multinational companies to minimize or eliminate
their tax liabilities in country of source and country of residence of their entities.

“The techniques used in tax avoidance are highly sufficient and satisfactory for multinational
companies to achieve their target of eliminating their tax liability”. Discuss.
b) Answer the following questions basing on the concept of Double Taxation:

i) Differentiate between International Double Taxation and Domestic Double Taxation.

ii) Explain the major cause(s) of International Double Taxation.
iii) Briefly describe the methods used to eliminate International Double Taxation.

QUESTION SIXTEEN
Lundamatwe Co. Ltd is a resident taxpayer of Tanzania. The company earned TZS. 16,000,000 from
Tanzania and TZS. 4,000,000 from Kenya. The tax rate in Kenya was 25% flat rate, while in Tanzania
there were three tax rates. For the income above TZS. 16,000,000 is 35%, for income between TZS.
4,000,000 and TZS. 16,000,000 is 30% and income not exceeding TZS. 4,000,000 was 25%.
Required:
i. Determine the tax burden of the company without any tax foreign tax relief.
ii. Determine the tax burden if the following relief methods are used;
a. Full exemption method is used
b. Exemption with progression approach is used
c. Full credit method is used
d. Ordinary credit method is used, assuming the tax rate applied in Kenya is 60%
iii. Determine the tax burden if deduction relief method is used.

QUESTION SEVENTEEN
a) Mention components that are included to determine the value of taxable supplies for imported
goods for VAT purpose.
b) Mr Zembwela has imported a brand-new Vanguard car on 1st April 2018 for business use.
During the VAT control verification exercise, the Commissioner found that taxes were not paid
in full as they had been affected by the importation of saloon. This has been found via ERV
which reflected the following:
i. Import Duty Tshs. 2,000,000, Excise Duty Tshs 3,000,000 and VAT Tshs 4,000,000.
ii. The motor car was acquired for Tshs. 12,500,000 at a retail selling price which is 120% of the
aggregate sum of CIF, taxes payable to customs department and 1% of CIF as wharfage charges.
iii. The tax rates at the time of importation were 25% Import duty, 10% Excise Duty and 18% VAT.

REQUIRED:
Determine the CIF value and taxes to be paid to the Tanzania Revenue Authority.

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QUESTION EIGHTEEN

MARFAT Investment Tanzania (MIT) Limited located at Songwe, is registered for VAT as a manufacturer
cum importer and is engaged in manufacturing and supply of consumer products. The following information
has been extracted from MIT’s records for the month of September 2022.

Details TZS. “000”

Taxable goods to registered customers 27,500,000
Taxable goods to un-registered customers 10,500,000
Export of taxable goods to Zambia 15,000,000
Purchases
Taxable goods from registered suppliers 18,900,000
Taxable goods from un-registered suppliers 10,000,000
Packing material from un-registered suppliers 4,450,000

Additional information:

1. Supplies of taxable goods to registered customers include:

• Goods worth TZS.2,250,000 (net of special discount of TZS.750,000). These goods were sold to an
associated undertaking. The special discount was not reflected in the invoice.
• Goods worth TZS.1,200,000 supplied to a customer in Iringa. MIT received full payment against the
goods in October 2022.
2. Supplies of taxable goods to unregistered customer include sales of TZS.1,300,000 to a customer who
purchased for further production.
3. Purchases from registered suppliers include:
• Goods worth TZS.1,000,000 purchased from Tesha Enterprises on 5th September 2022. On 20th
September 2022, Tesha enterprises informed MIT that with effect from 1 st September 2022, its
registration has been suspended by the Commissioner General.
• Goods worth TZS.850,000 purchased in cash.
•
Goods worth TZS.500,000 purchased from AB supplies. MIT did not declare the sale of these goods
in its tax return for the month of September 2022.
4. Taxable goods worth TZS.1,500,000 were used in the business meeting held for the promotion of
MIT’s business.
5. A machine costing TZS.25,000,000 was acquired and commissioned into operation in September 2022.
The machine was used for both standard rated and zero-rated supplies.
6. Electricity bill of TZS.900,000 for the month of April 2022 was paid in May 2022. However, related
input tax of TZS.140,000 has still inadvertently remained unclaimed.
7. The auditors have proposed to make a provision of 50% against obsolete and expired stock of
TZS.3,500,000. The goods are lying in warehouse since June 2020. Input tax relating to this stock was
claimed in June 2020.
8. VAT credit of TZS.4,150,000 has been brought forward from previous tax period.
All the above figures are exclusive of VAT, except where specified otherwise stated.
REQUIRED:

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In the light of the provisions of the Value Added Tax Act, Cap. 148 and Rules made thereunder, compute the
amount of VAT payable by or refundable to MIT and input tax to be carried forward if any, for the period of
September 2022.

QUESTION NINETEEN:
You are a tax advisor to a real estate company, Azimio Real Estate Ltd., that is planning to develop a
residential property complex in Tanzania Mainland. The company has purchased a piece of land with
30,000square meters worth TZS 400million per hectare and plans to import construction materials such
as cement and steel, both of which are subject to excise duty. The company is also planning to sell the
developed residential units to individual buyers. As part of the transaction, Azimio Real Estate Ltd.
needs to comply with the property tax, stamp duty, and excise duty regulations in Tanzania.
Required:
a. Calculate the stamp duty that Azimio Real Estate Ltd. would need to pay on the land purchase,
assuming the stamp duty rate is 1% of the property value.
b. The company plans to import 500 metric tons of cement worth USD200,000 as CIF value w and
20,000 metric tons of steel worth USD150,000 as CIF value. Assume the import duty is 20% and
exchange rate is TZS2,750. The excise duty on cement is 5% of the value and on steel, it is TZS
20,000 per metric ton. Calculate the total excise duty payable on these imports.

QUESTION TWENTY
Bob Commission Agent is dealing with the importation of used vehicles from Japan and selling at a
commission of 20% of the total cost of the respective vehicle. Bob Commission Agent imported a
saloon car with 2,000cc on 1st January 2018; the car was manufactured since 1st January 2003. This
car is now selling at Tshs. 18,000,000.
The tax rates for this car at the time of importation were: Import Duty 25%, Excise Duty due to age
15%, Excise Duty due to engine capacity (cc) 5% and VAT 18%. The exchange rate at the time of
importation was Tshs. 2,250/USD.
Other customs duties payable to Customs Department including wharfage charges which is 50% of
the CIF.
Required;
Determine all duties/taxes paid to Tanzania Revenue Authority with respective to this vehicle at the
time of importation.

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