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%