The Electronic Invoice in Tanzania

Tanzania advances its Electronic Fiscal Device Management system (EFDMS) with the phased implementation of the Virtual Fiscal Device (VFD) system, substituting the Electronic Fiscal Device (EFD)

The Tanzania Revenue Authority (TRA) has developed the VFD system that will coexist with the EFD systems to issue digital tax documents for transactions involving the sale of goods and services. 

VFD is a system that sends electronic invoices to the TRA in real time receiving a validation response from the tax authority. 

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.