As of July 1, 2015, Tanzania requires non-resident entities like Twilio Inc. dba Sendgrid & its affiliates (hereinafter, “Twilio Sendgrid”) to collect Value Added Tax (VAT) for any Electronically Supplied Services (“ESS”) sold to non-registered VAT customers in Tanzania. This guide covers how Twilio Sendgrid charges VAT and what services are taxable.
The following topics are discussed in this guide. Click a topic to skip directly to this information:
- Value Added Tax (VAT) overview.
- When will Twilio start charging VAT in Tanzania?
- How can I be tax exempt for VAT?
- I am a business, but do not have a VAT number. I am not required to register for VAT since my business falls under the required sales threshold for registering.
- How is VAT determined?
- What rate is VAT charged in Tanzania?
- I forgot to enter my VAT number, but am a VAT registered B2B customer - can I request a refund?
- Where can I see the VAT charged on my Invoice?
- What is the Reverse Charge Mechanism?
Value Added Tax (VAT) overview
Tanzania Revenue Authority (TRA) passed legislation effective July 1, 2015, requiring non-resident entities selling digital services to collect and remit a 18% Value Added Tax (VAT) on its sales to Tanzanian private consumers (B2C) .
When will Twilio Sendgrid start charging VAT in Tanzania?
Twilio Sendgrid will begin collecting VAT on services sold to customers located in Tanzania starting in February 2024.
VAT is assessed and applied to your account at the start of the month for the previous month’s usage. For example, you will be charged VAT for your February usage in March.
How can I be tax exempt for VAT?
B2B customers with a valid VAT number will not be taxed on our end. In order to be exempt, B2B customers need to submit their VAT number in the Account Details Page. However, B2B customers are still responsible for the VAT and should self-assess the VAT through the reverse charge mechanism on their Tanzania VAT return.
I am a business, but do not have a VAT number. I am not required to register for VAT since my business falls under the required sales threshold for registering.
The VAT laws for nonresidents are designed to capture VAT from B2C consumers and from B2B consumers that fall under the sales threshold. Unless a B2B customer can provide a valid VAT number, they will be considered a B2C and the transaction will be subject to tax. Non-residents are not required to tax B2B customers with valid VAT numbers since B2B customers are supposed to self-assess the VAT on their end.
How is VAT determined?
VAT is applicable based on the type of products or services that are purchased. We have determined that most of Twilio Sendgrid's products & services are subject to VAT in Tanzania.
What rate is VAT charged in Tanzania?
Twilio Sendgrid's services will be subject to the 18% VAT rate as determined by the Tanzania Revenue Authority (TRA)
I forgot to enter my VAT number, but am a VAT registered B2B customer - can I request a refund?
If you are a B2B customer with a valid VAT number in Tanzania, please contact our Support team for a credit of the VAT amount charged within 90 days of the initial charge. For invoices issued in closed periods, we will credit the VAT charged in the following month’s invoice.
Where can I see the VAT charged on my Invoice?
You can see the VAT amount charged in the Tax Summary section of your invoice. Your invoice will continue to show subscription charges, usage and taxes in the same currency as before.
What is the Reverse Charge Mechanism?
The Reverse Charge Mechanism is the process in which B2B customers are required to self-assess and report VAT charges.
A non-resident entity like Twilio Sendgrid in the US is not required to impose Value-Added Taxes (VAT) on Business-to-Business (B2B) consumers that are VAT registered. That said, the B2B consumer is still responsible for reporting VAT. This is done through the reverse charge mechanism.
The reverse charge mechanism shifts the responsibility of accounting for VAT on these purchases to the B2B consumer. In other words, these customers must report the applicable VAT on their own VAT return.