Valuation of Used Motor Vehicles -TANZANIA



Abbreviations used
·        CIF – Cost Insurance Freight (Taxable Value)
·        I/D – Import Duty
·        EXA – Excise duty for vehicles aged more than 10 years
·        EX – Excise Duty
·        VAT – Value Added Tax
·        CV – Cost of Vehicle
·        CRP- Current Retail Price
·        PM- Profit Margin
·        P – Profit
·        VBD – Value Before Depreciation
TAX RATES
NON - UTILITY VEHICLES
C.C
I/DUTY
E/DUTY
VAT
0-1000
25%
-
18%
1001-2000
25%
5%
18%
2001 and above
25%
10%
18%

UTILITY VEHICLES
ITEM
I/DUTY
E/DUTY
VAT
Pick ups
25%
18%
Trucks ( 5tons-18.5tons)
10%
18%
Trucks ( above 18.5tons)
0%
18%
Tractors(trucks for pulling semi trailers)
0%
18%
Buses (carrying from 10 passengers )
25%
18%
Land cruiser Hard tops carrying from 10 passengers
25%
18%
STEP. 1
CALCULATION OF THE COST OF MOTOR VEHICLE WITHOUT PROFIT
·        P = CV*25%=CV*0.25=0.25CV
·        CRP=CV+P
·        CRP=CV+0.25CV
·        CRP=1.25CV
·        CRP/1.25=CV
STEP.2
CALCULATION TO OF PROFIT MARGIN
PM=CRP – CV
STEP.3
CALCULATION OF CIF VALUE BEFORE DEPRECIATION
We remove the tax element from Cost Value
·        VBD = CV/1.25/1.18 for vehicles with less than 1000cc
·        VBD = CV/1.25/1.05/1.18 for vehicles with more than 1000cc but not exceeding 2000cc
·        VBD = CV/1.25/1.05/1.18 for vehicles exceeding 2000cc
STEP.4
CALCULATION OF DEPRECIATION
DEPRECIATION FOR DIRECT IMPORTS
0to <1 year
10%
1 to < 2 years
15%
2 to < 3 years
20%
3 to < 4 years
25%
4 to < 5 years
30%
5 to < 6 years
35%
6 to < 7 years
40%
7 to < 8 years
50%
8 to < 9 years
60%
9 to ≤ 10 years
70%
above 10 years
80%
Depending age of the motor vehicle and basing on the given depreciation rates in the table above the depreciated value will be calculated as follows
DEPRECIATION VALUE = VBD * RATE
CALCULATION OF TAXES
a) Motovehicles with Import duty and VAT only
·        I/D = CIF * 25%
·        VAT = (CIF+I/D) * 18%
b) Motovehicles with Import duty and VAT but aged more than 10 years
·        I/D = CIF * 25%
·        EXA = (CIF+I/D) * 20%
·        VAT = (CIF+I/D+EXA) * 18%
c) Motovehicles with Import duty ,Excise Duty and VAT
Vehicles with more than 1000cc but not exceeding 2000cc rate is 5% Excise duty, and those with more than 2000cc rate is 10%
·        I/D = CIF * 25%
·        EX = (CIF+I/D) * 5%
·        VAT = (CIF+I/D+EX) * 18%
d) Motor vehicles with Import duty ,Excise Duty and VAT but aged more than 10 years
Vehicles with more than 1000cc but not exceeding 2000cc rate is 5% Excise duty, and those with more than 2000cc rate is 10%
·        I/D = CIF * 25%
·        EXA = (CIF+I/D) * 20%
·        EX = (CIF+I/D) * 5%
·        VAT = (CIF+I/D+EXA+EX)*18%