THE Union and Zanzibar governments have jointly developed a system of determining the amount of revenue in the form of Value Added Tax (VAT) generated from mobile money transactions, enabling each revenue body to collect what it deserves, it has been stated.
According to the Zanzibar Deputy Minister for Finance and Planning Hamad Chande, the two governments developed a new system known as Electronic Revenue Collection System (e-RCS), capable of establishing all mobile money transactions performed.
The deputy minister was responding to the question asked by Jang'ombe legislator Hassan Omary King (CCM), who wanted to know when would the Tanzania Revenue Authority (TRA) stop collecting VAT from mobile transactions performed in Zanzibar, including reimbursing the collected money to the Zanzibar government.
Tanzania Mainland charges 18 per cent in VAT on goods and services, while Zanzibar charges 15 per cent.
The deputy minister said while TRA collects taxes in the Union government, Zanzibar Revenue Board (ZRB) performs the function in the Isles.
The deputy minister said the VAT Act, which provides for taxation in respect of the supply of goods and services and importation of goods, clearly directs the tax to be charged and collected in the area where the service has been rendered.
"That being the case when the service is rendered in Tanzania Mainland, TRA becomes responsible for collecting VAT amounting to 18 per cent, as per the VAT Act used on Mainland but when the same service is rendered in Zanzibar, the ZRB becomes in charge as per the VAT law applicable in the Isles," he clarified.
He said to be able to determine where the service has been rendered for taxation purposes; both the Union and Zanzibar governments crafted the system- Electronic Revenue Collection System (e-RCS) to detect all the transactions made on each side.
The system, according to the deputy minister, is supervised and managed by experts from TRA and ZRB.