The Electronic Invoice in Tanzania

In Tanzania, an Electronic Fiscal Device (EFD) is used to communicate all sales transactions to the Tanzania Electronic Fiscal Data Management System (EFDMS). These EFDs are local tools that send invoice and ticket information in real time to the tax authority, which validates the information and returns a QR code that is added to the invoice or ticket.

From 2020, companies can also use a Virtual Fiscal Device (VFD) and establish an automated connection with the Tax Authority. All companies that invoice more than 14 million TZS must comply with this regulation.

It can be used with other POS systems or management software used for billing and enables taxpayers to send invoices directly to the TRA without the need for a physical EFD.

How does the VFD work?

Through VFD the taxpayer’s system connects with the TRA’s EFDMS system. It requires previous registration to identify a company using a verification token. 

The VFD’s flow is the following: the taxpayer sends a request message through the EFDMS, if accepted it generates a company registration in the TRA and the company receives a username and password. 

The next step is to request a token that must be included in invoices sent to the EFDMS. If the TRA system validates the electronic invoice it will be registered in the system. Once validated an acceptance message is sent to the taxpayer which can be forwarded to the final client. 

Advantages of VFD

• There is no longer need for physical hardware (authorized providers act as intermediaries, conduct updates, and maintenance).
• Security and data protection through encryption and authentication of transactions using verification tokens. 
• Enables real time management and verification in each stage. 

The VFD system is compatible with EDI solutions like EDICOM’s global e-invoicing Platform for the emission and reception of e-inovices, which is adapted to the specifications of each country where clients operate and is continuously updated. 

This solution is the most adequate for clients with an elevated invoicing volume since it is completely automated and generates the electronic invoice in the format required from each tax authority from data stored in the company’s ERP system.