1. What is VAT and when was it introduced in Zimbabwe?

Value Added Tax (VAT) is an indirect tax on consumption, charged on the supply of taxable goods and services. It is levied on transactions rather than directly on income or profit, and is also levied on the importation of goods and services. This tax was introduced in 2004 to replace the former sales tax regime.

Enabling Legislation: -

Value Added Tax Act (CHAPTER 23:12)

Value Added Tax (General) Regulations (Statutory Instrument 273 of 2003)

  1. Rates of VAT

i    Standard rate of 15%

  • Generally, all goods and services are standard rated unless specifically exempted, zero-rated or subject to VAT at a special rate.

ii    Zero-rate (0%)

iii    Exemptions

-No value added tax is chargeable on exempt supplies.

With effect from 1 January 2024 the VAT Regulations were amended as follows:

Insertion of additional items in First Schedule of the VAT Regulations (Exemptions).

Repeal of all Zero rated items in Second Schedule of the VAT Regulations.

NB: a) Exemptions listed in section 11 of the VAT Act remained in place which includes provision of accommodation in a dwelling, educational and training services for preschool to secondary school, provision of medical services, supply of financial services.

  1. b) Zero rated items in section 10 of the VAT Act remained in place which covers mainly exports and related services.

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  1. Who should charge VAT?

Any person who is registered or required to be registered for VAT is required to charge value added tax. This means any person who is carrying on trade as defined in the legislation. Taxpayers should check with the Zimbabwe Revenue Authority and obtain clarification on what is considered trade for the purposes of registration for Value Added Tax.

What are the Requirements for Registration?

  • Compulsory Registration

Applicable to traders whose taxable supplies exceed or are likely to reach US$25,000.00 or ZiG equivalent at the time of registration in a period of 12 months with effect from 1 January 2024. The trader will be required to have a fixed place of abode or business and should maintain records of his transactions.

  • Voluntary Registration

Applicable to traders who wishes to register voluntarily and whose taxable supplies do not meet or exceed the US$25,000.00 or ZiG equivalent threshold and have in the past not been found having failed to comply with the legislation. The trader will be required to have a fixed place of abode or business and should maintain records of his transactions.

  1. Obligations of a Registered Operator

The registered operator is required to: -

  • Charge VAT
  • Issue fiscal tax invoices within 30 days of supply and these invoices should have the features, which are outlined in the Act.
  • Remit the VAT to ZIMRA and submit a VAT return on or before the 25thday of the month following the end of tax period in which the VAT was collected.
  • Maintain a record of all transactions.
  • All Value Added Tax (VAT) registered operators should Fiscalise as outlined in SI 104 of 2010 as read with SI 148 of 2016 and SI 153 of 2016.

List of approved suppliers of fiscal devices

  1. How does a Registered Operator Calculate the Tax that should be paid to ZIMRA?

The registered operator completes a Value Added Tax return (VAT7) on which he declares the total sales (both cash and credit) and tax that he charged (output tax), and the total purchases and the tax he was charged (input tax).

He then subtracts the tax on purchases (both cash and credit) from the tax on sales. In the event that the result is positive, that amount should be paid to ZIMRA and where the result is negative, ZIMRA will refund this to the taxpayer.

Where the refund is less than US$60.00 or ZiG equivalent, the amount is held in credit in the taxpayer’s account and will be refunded together with any future refunds when such cumulative refunds reach or exceeds US$60.00.

  1. What are the requirements for one to claim tax on purchases (Input Tax)?

The claim must be made on the VAT return within 12 months of the date of invoice for the expenses incurred by the registered operator.

The registered operator must be holding the fiscal tax invoices, bills of entry, credit notes, debits note, or other sufficient documents in support of the expenses incurred.

With effect from 1 September 2022, a supplier is not required to provide a fiscal tax invoice where the amount is less than US$10.00 or ZiG equivalent.