Civil Reference No. 7 of 2004
Serengeti Breweries Limited v Commissioner General, Tanzania Revenue Authority, Civil Appeal No. 453 of 2023 (Court of Appeal, 3 July 2025)
The Tanzania Revenue Authority (TRA) conducted a VAT audit of Serengeti Breweries Limited for the 2014 and 2015 tax years and found discrepancies between the sales recorded by the company's Electronic Fiscal Devices (EFDs) and the VAT declared in its returns. The company explained that the difference resulted from credit notes issued to distributors as trade incentives and promotional discounts, which reduced its VAT liability. TRA rejected this explanation and issued an additional VAT assessment. The Tax Revenue Appeals Board set aside the assessment, but on appeal the Tax Revenue Appeals Tribunal reinstated it. Serengeti Breweries appealed to the Court of Appeal.
Whether the credit notes issued by Serengeti Breweries satisfied the requirements of Regulation 11 of the Value Added Tax (General) Regulations, 1998.
Whether distributor incentives and promotional discounts reduced the value of taxable supplies for VAT purposes.
Whether TRA lawfully issued the additional VAT assessment based on the discrepancy between EFD sales records and VAT returns.
The Court of Appeal dismissed the appeal with costs. It held that the credit notes relied upon by Serengeti Breweries did not meet the statutory requirements under Regulation 11 and therefore could not lawfully reduce the value of taxable supplies. The Court found that the distributor incentives did not alter the VAT liability, and TRA was justified in assessing VAT based on the sales reflected in the EFD records. The additional VAT assessment was therefore lawful.
The decision confirms that credit notes reduce VAT liability only if they strictly comply with the statutory requirements under the VAT Regulations.
It establishes that trade incentives, rebates, or promotional arrangements do not automatically reduce the taxable value of supplies unless they are documented through legally valid credit notes.
The case reinforces the evidentiary importance of Electronic Fiscal Device (EFD) records, which TRA may rely upon in determining VAT liability where they differ from VAT returns.
It underscores the principle that VAT adjustments must strictly comply with statutory requirements, and commercial accounting practices cannot override mandatory tax legislation.
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