VAT Deregistration Tanzania: Cancelling VAT Registration With TRA

This guide sets out the VAT deregistration Tanzania rules on the Mainland and the separate route in Zanzibar: who must apply, when TRA cancels on its own, the final return, VAT on stock kept at exit, refunds, fiscal devices, penalties and a worked example.

Who should read this

• Companies closing down that are registered for VAT on the Mainland and plan a strike-off or winding up.
• Traders whose sales have fallen below the registration threshold and want to stop filing monthly VAT returns.
• Taxpayers named in a TRA notice of intention to cancel registrations that no longer meet the criteria.
• Directors and finance teams of dormant companies that are still filing nil VAT returns every month.
• Businesses in Zanzibar, where ZRA runs VAT under different laws, a different rate and a different threshold.

VAT registration does not lapse when trading stops. Until the Commissioner General cancels it by notice, monthly returns stay due.

What the law says: sections 39 to 42 of the VAT Act

The governing text is the Value Added Tax Act, Cap. 148 R.E. 2023, as published by the Tax Revenue Appeals Board. Part III deals with registration. Four sections at its end deal with leaving the register.

The procedure sits in the Value Added Tax (General) Regulations, 2015, GN 225 of 2015. Regulation 15(1) requires the application on form ITX246.02.E. Regulation 15(2) links the decision to section 40 and to "sufficient evidence" that taxable supplies have stopped for good.

The Revised Edition renumbered the later parts of the Act. Section 84 was section 80 in the VAT Act, 2014 as enacted, and many guides still cite the old number. Sections 39 to 42 kept their numbers.

When must a registered person apply to cancel VAT registration?

Section 39(1) and (2) make the application compulsory for a registered person that "permanently ceased" to make taxable supplies. The deadline is "within fourteen days" after that date. TRA's VAT page repeats the 14-day rule.

The trigger is permanent cessation of taxable supplies, not the decision to close a company. Examples are a shop that sells its last stock and hands back the premises, or a business that moves wholly into exempt supplies. A seasonal pause is not permanent cessation.

The application goes on form ITX246.02.E. According to RSM Tanzania's note of 20 April 2021, the form asks for the VRN, physical address, directors, the nature of the activity and the reasons. RSM also reports that TRA audits the applicant's VAT position before it grants the request. That audit practice is reported by RSM, not written in the Act.

Can you deregister because turnover fell below the threshold?

Yes, but it is a choice, not a duty. Section 39(3) says a registered person that "fails to maintain the registration threshold may apply" for cancellation. The threshold is fixed by regulations under section 28(4).

The current Mainland threshold is taxable turnover of TZS 200 million in 12 months, or TZS 100 million in 6 months (F0242). TRA's VAT page states the same figures. The 2015 Regulations, as first made, set TZS 100 million a year in regulation 14; later amendments raised it. We did not confirm the number of the amending Government Notice this session.

Falling below the threshold matters for three reasons:

• Monthly returns stop. A cancelled person no longer files the VAT return due on the 20th of each month (F0245).
• Prices can fall. Non-registered sellers do not charge 18% (F0239), which helps where customers are consumers.
• Credits are lost. A person that is not registered cannot claim input tax, which hurts where customers are VAT-registered businesses that want a tax invoice.

Some persons register whatever their turnover, such as professional service providers (F0243). For them, low turnover is not a ground to leave. Section 40 adds a timing rule. If the person has been registered for 12 months or more, the Commissioner General "shall" cancel once satisfied. If registration is under 12 months old, cancellation is discretionary.

When can TRA cancel your VAT registration on its own?

Section 41(1) lets the Commissioner General cancel by notice where satisfied that the person is no longer required to be registered. The four grounds are:

1. registration was obtained by "false or misleading information";
2. the person "is not carrying on an economic activity";
3. the person "has ceased to produce taxable supplies"; or
4. taxable turnover "falls below registration threshold".

Under section 41(2), cancellation takes effect "from the date set out in the notice of cancellation". That date may differ from the date trading stopped, and it decides when the final return falls due.

TRA has used this power in bulk. Auditax International reported on 4 March 2023 that TRA published a list of traders it intended to deregister. Those who wished to stay registered were asked to write to the Commissioner General with reasons. A business on such a list that still trades above the threshold should respond in writing before the date given.

What happens to stock and assets on hand at deregistration?

This is where most of the money sits. Input tax claimed on stock or equipment kept after leaving the register has to be paid back.

Section 84 of the R.E. 2023 text carries the heading "Adjustment on cancellation of registration". We read its operative wording in the 2014 Act, where it was section 80. A person whose registration is cancelled "shall make an increasing adjustment in his final value added tax return" for property still held, if an input tax credit was allowed on it.

The adjustment is the tax fraction of the property's fair market value "on the day immediately preceding the cancellation". Where only part of the input tax was credited, the adjustment is reduced to match. Section 2 defines the tax fraction as R divided by (100 + R). At 18%, that is 18/118 of a value that includes VAT.

Section 2 defines fair market value as what the supply "would fetch in an open market transaction" between unconnected persons. Book value is not the test: a fully depreciated forklift still has a market value.

Selling stock before the effective date is often cleaner than paying on market value afterwards. The price is documented and a registered buyer can claim the VAT. Section 20 of the Act deals separately with the sale of an economic activity as a whole. If the business is being sold as a going concern, read that section before relying on this table.

What happens to input tax credits and refund claims?

Input tax is only claimable by a registered person, and only within six months of the tax invoice or EFD receipt (s.73; F0245). Any purchase invoices not yet claimed should go into returns filed before cancellation, or into the final return where the period allows.

A credit balance is harder. In the ordinary case a negative net amount is carried forward to later periods under section 85. A cancelled person has no later periods. Section 86 allows an immediate refund only in set cases, such as businesses whose turnover is mostly zero-rated. The text we read does not give a cancelled person an express refund route of its own.

RSM's 2021 note says a deregistered taxpayer cannot claim input VAT suffered. Treat any credit balance as at risk:

• Apply before you cancel. If the business qualifies for a refund, lodge the claim while still registered. Section 88 sets the application rules; in the 2014 text a claim was barred after three years from the end of the relevant period.
• Expect an offset. In the 2014 text, a refund is not paid until all VAT returns are filed, and the Commissioner General may first set it against other tax owed, including interest and penalties.

Our VAT refund guide covers the refund conditions and timing in detail. The VAT return guide explains how a negative net amount appears on the return.

What are the EFD and VFD obligations after deregistration?

Section 42(b) requires a cancelled person to "immediately cease to use or issue any documents including tax invoices" that show it as registered. It must also surrender its VAT registration certificate. Issuing a VAT invoice after that date is collecting tax the person is not entitled to charge.

Fiscal receipts continue. Section 44 of the Tax Administration Act, Cap. 438 R.E. 2023 requires anyone who supplies goods or services to issue a fiscal receipt, unless the Commissioner General has excluded them. TRA's EFD page says non-VAT traders with turnover of TZS 11 million or more a year must use a device (NEW-02-24).

So a business that leaves VAT but keeps trading usually keeps its EFD or VFD, issuing receipts without VAT or the VRN, as RSM's note also says. Ask the supplier and TRA to reconfigure it from the effective date.

A business that stops trading altogether should close the device with TRA as part of the exit. TRA's EFD page requires changes to the machine to be notified to the Commissioner within 24 hours. Our guide to EFD machines in Tanzania covers devices, suppliers and receipts.

How does VAT deregistration fit with closing a company?

VAT cancellation is one step in a longer exit, and each authority runs its own file. Cancelling VAT does not close the TIN, end income tax filing, or remove the company from the BRELA register.

Settle VAT first, because tax clearance depends on a clear TRA ledger. Our guides to tax clearance before closing a company and closing a company in Tanzania set out the full sequence.

A company that will stay on the register but stop trading is in a different position. It can leave VAT and stop monthly nil returns, but income tax returns and BRELA annual returns continue. Our guide to dormant company filings lists what keeps running.

What penalties apply if you get deregistration wrong?

The Tax Administration Act sets most of the consequences. Fixed penalties use the currency point of TZS 20,000 (NEW-02-05).

The fine for a late cancellation application is not in our register. The TanzaniaLaws consolidation of the Tax Administration Act, in pre-revision numbering, sets fines for failing to comply with a tax law at 10 to 50 currency points, with up to six months in prison in the higher band. Confirm the current text before relying on that range.

The bigger cost is usually not a fine. A business that never applies stays registered, and each unfiled nil return draws the monthly penalty.

How do you object to a TRA decision on deregistration?

The exit audit often produces an assessment, for example where TRA values the stock higher than the business did. An objection must be lodged within 30 days of service (NEW-02-19; TAA s.62).

The objection is admitted only once the deposit is paid. That is the greater of the tax not in dispute or one third of the assessed tax. Whether a refusal to cancel registration is itself an objectable decision depends on section 94 of the VAT Act and section 61 of the TAA. We did not confirm that point this session.

If the objection fails, the appeal goes to the Tax Revenue Appeals Board, where a statement of appeal costs TZS 100,000 (NEW-02-20). Appeals and anything that may lead to prosecution or seizure go to an advocate.

What is the position in Zanzibar?

VAT is not a Union tax. In Zanzibar the Zanzibar Revenue Authority runs it under separate laws, so a Mainland cancellation does not touch a ZRA registration.

The ZRA VAT page gives the standard rate as 15%, with 18% for banking, insurance, telecommunications and some digital services. It gives the threshold as taxable turnover of TZS 100 million a year (F0246). PwC Worldwide Tax Summaries, last reviewed on 9 September 2026, gives the same rate and threshold.

The Zanzibar VAT Act No. 4 of 1998, consolidated to June 2025, keeps a Part IV headed "Registration and Deregistration". Most of its sections were repealed by Act No. 7 of 2009. The working rules now sit in the Tax Administration and Procedures Act No. 7 of 2009, also consolidated in 2025.

Zanzibar returns are due by the 20th of the following month. Late filing costs TZS 100,000 or 10% of the tax shown, whichever is greater, per month (TAPA s.18(6)). Our page on Zanzibar VAT versus the Mainland compares the two systems.

Worked example: a hardware wholesaler closing in Dar es Salaam

Kilima Hardware Ltd has been VAT-registered on the Mainland since 2021. Its directors decide to close. The last sale is made on 30 November 2026, and the company does not intend to trade again. The figures below are illustrative.

Step 1: apply in time. Permanent cessation is 30 November 2026, so the application on form ITX246.02.E is due within 14 days, by 14 December 2026. The company has been registered for over 12 months, so section 40(a) applies once TRA is satisfied. Assume TRA's notice sets 31 December 2026 as the cancellation date.

Step 2: keep filing. The November return is due on 20 December 2026, even though trading has stopped.

Step 3: value what is still held on 30 December 2026. That is the day before cancellation.

Step 4: compute the final return. Assume December output tax is nil and unclaimed input tax on a final rent invoice is TZS 900,000. The net amount payable is 12,600,000 minus 900,000, which is TZS 11,700,000. It must be filed and paid within 30 days of cancellation, by 30 January 2027.

Step 5: compare a clearance sale. Suppose instead the company sells the stock to a registered retailer on 15 December for TZS 53,100,000, VAT included. Output tax is 53,100,000 x 18/118, which is TZS 8,100,000. That is TZS 900,000 less than the adjustment on market value, and the buyer can claim the VAT. The stock no longer sits in the final return.

Step 6: the cost of filing late. If the TZS 11,700,000 return is filed two months late, the monthly penalty is the higher of 2.5% x 11,700,000 = TZS 292,500 or TZS 300,000 for a body corporate. That gives TZS 300,000 a month, or TZS 600,000 for two months, before interest (NEW-02-06; NEW-02-08).

What to do now

1. Fix the cessation date. Record in a board minute the date taxable supplies stop for good, and count 14 days from it.
2. Apply on the prescribed form. File form ITX246.02.E with the reasons, VRN and director details, and keep proof of lodgement.
3. Keep filing monthly returns. File every return due by the 20th until the cancellation notice arrives, including nil returns.
4. Claim outstanding input tax. Put every purchase invoice inside the six-month window into a return before cancellation.
5. Decide on any credit balance. Check whether a refund can be claimed while still registered, and lodge it before cancelling.
6. Count and value stock and assets. Take a dated stock count and market valuations for the day before cancellation, or sell before it.
7. Change invoices and the fiscal device. Stop VAT invoices on the effective date and reconfigure or close the EFD or VFD with TRA.
8. File the final return and pay. Include the section 84 adjustment and pay against the control number within 30 days.
9. Close the rest of the file. Move to the income tax exit, tax clearance and, where relevant, BRELA strike-off.

Key dates

How Zatra helps

Zatra prepares the cancellation application, the stock and asset schedule for the section 84 adjustment, and the final VAT return. We review open input tax and refund positions before the cancellation date, so value is claimed while the business is still registered. We then run the income tax exit, tax clearance and BRELA steps in order.

Our TIN and VAT registration desk handles registration and cancellation with TRA and ZRA. Our tax and regulatory compliance team manages the returns, the EFD changes and the final audit. Background on registration is in our TIN and VAT registration guide.

Costs come in two separate buckets. Government charges, such as tax due, penalties or Tax Revenue Appeals Board fees, are paid at the official rate against the authority's control number. Zatra's professional fee is quoted on its own line and never mixed with them. Zatra prepares and files, but does not decide or guarantee any authority's outcome. Prosecution, seizure, disputes before the Board or the courts, and formal legal opinions go to an advocate.

Sources and status

Accurate as at 21 October 2026.

• Value Added Tax Act, Cap. 148 R.E. 2023: TRAB copy, 2025 print; ss.2, 28, 33, 37, 39 to 42, 70 read. Accessed 21 Oct 2026.
• Value Added Tax Act, 2014 as enacted: Tanzania Trade Portal; ss.80 to 84 (now ss.84 to 88) read. Accessed 21 Oct 2026.
• VAT (General) Regulations, 2015, GN 225 of 2015: TanzLII, version of 19 Jun 2015; regs 14 and 15. Accessed 21 Oct 2026.
• Tax Administration Act, Cap. 438 R.E. 2023: TRA copy, 2025 print; ss.26, 44, 76. Accessed 21 Oct 2026.
• TRA VAT page and Taxes and Duties at a Glance 2025/26: TRA, 2025 and 2026. Accessed 21 Oct 2026.
• Zanzibar Tax Administration and Procedures Act No. 7 of 2009: ZRA, consolidated to June 2025; ss.5, 12, 15, 18, 18A. Accessed 21 Oct 2026.
• RSM Tanzania, VAT de-registration process: RSM, 20 Apr 2021. Accessed 21 Oct 2026.
• Zatra fee register lines F0020, F0196, F0239, F0242, F0243, F0245, F0246, NEW-02-05 to NEW-02-08, NEW-02-11, NEW-02-13, NEW-02-17 to NEW-02-20, NEW-02-24: fees at 26 Sep 2026. Accessed 21 Oct 2026.

Figures to confirm before you act

• Section 84 wording: we read the operative text in the 2014 Act (s.80); confirm the R.E. 2023 text has not been amended
• Threshold instrument: the Government Notice that raised the regulation 14 threshold to TZS 200 million
• Refund after cancellation: whether TRA will refund a credit balance to a cancelled person (unknown at publication)
• Late application fine: the current amount for failing to apply within 14 days
• Objection route: whether a refusal to cancel is an objectable tax decision under VAT Act s.94
• Form version: that ITX246.02.E is still the form TRA accepts, and whether it is filed online
• Zanzibar assets rule: how ZRA treats VAT on stock and assets held at deregistration
• EFD closure: TRA's current steps for closing or reconfiguring a fiscal device on exit

This article is general information based on official sources available at the date of publication. It is not legal, tax or financial advice. Laws and notices change. Verify with the issuing authority or consult Zatra before acting.