VFD Tanzania| Virtual Fiscal Device

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VFD in Tanzania
Tally Solutions | Updated on: October 26, 2022

The Tanzanian Revenue Authority (TRA), in an effort to modernize its financial data management system EFDMS – Electronic Fiscal Device Management System has introduced the Virtual Fiscal Device - VFD. 

The VFD system will exist side-by-side with the EFD systems and allocate digital tax documents for transactions associated with the sale of goods and services.

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What is VFD?

 VFD is a new-gen solution that eliminates the requirement of a physical EFD or any intermediaries and directly connects with the TRA portal to fetch all the necessary details to issue a valid invoice in Tanzania. It can be used with other POS systems or management software for billing, thereby enabling taxpayers to send invoices directly to the TRA without needing a physical EFD.

How does the VFD function

VFD is a system that not only automates sending electronic invoices to the TRA, but also the receipt of acknowledgments of validation of invoices made by the tax administration. The VFD system promotes compliance and is a big step towards digitization. With VFD, the taxpayer’s system directly connects with the TRA’s EFDMS system. Here's a step-by-step guide to how the VFD functions: 

How to activate VFD

  • Taxpayer sends a request message through the EFDMS
  • Taxpayer sends a request message through the EFDMS
  • Once accepted, it generates a company registration in the TRA
  • Post this; the company receives a username and password

How to issue invoices with VFD

  • Your business management software is directly integrated with the TRA portal
  • Whenever you record a sales invoice, automatically the details are shared with TRA portal which in turn authenticates the invoice and sends it back to the ERP software
  • The invoice gets printed with all the required details like QR code

Benefits of VFD

The implementation of VFD is a big move towards digitization by the TRA. With the new system in place, the process of invoicing will not only become more streamlined but also promote compliance:

Eliminates Hardware: With VFD, there's no need to have the physical hardware, as the authorized providers will act as intermediaries and conduct updates and maintenance of the VFD.

Enhanced Security: With VFD, taxpayers can expect enhanced security and data protection through encryption and authentication of transactions using verification tokens.

Real-time invoice management: Enables real-time management and verification of invoices at each stage.

What is the requirement for VFD?

To get a VFD account, you need to have the Taxpayer's Identification Number (TIN), VAT Registration Number Certificate (VRN), and an application letter. Post the submission, it would take 2 working days to get your VFD account to be fully integrated and enjoy the flexibility.

Is EFD machine required for VFD?

No, you don't need to have an EFD Machine to use VFD. VFD is a new-gen solution that can be accessed from any smart device with internet access for instance, Laptop, Desktop, or mobile.

Bottomline

The system will not only improve the invoicing process but also simplify the number of information relating to the input invoice that needs to be keyed in. The implementation of VFD in a phase-wise manner is expected to ramp up digitization, thereby enhancing the taxpaying experience and improving compliance.

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