An understanding of how Value Added Tax (VAT) operates is essential for businesses operating in Zimbabwe as well as any potential investors. This article provides a summary of the VAT measures that were introduced and are effective from the 1st of January 2024 as promulgated in terms of the Finance Act. We also make reference to the Value Added Tax (General) (Amendment) Regulations, 2024 (No. 64) which were gazetted on the 9th of February 2024.
What is VAT?
Value Added Tax (VAT) is an indirect tax on consumption, charged on the supply of taxable goods and services. It is levied on transactions and also on the importation of goods and services. The principal legislation is the Value Added Tax Act (Chapter 23:12).
What is the General Rate of VAT?
With effect from the 1st of January 2023 the general rate of VAT in Zimbabwe is 15%.
Generally, all goods and services are standard rated unless specifically exempted, zero-rated or subject to VAT at a special rate.
Zero-rate (0%)
Exports of goods from Zimbabwe to any address in an export country.
Basic foodstuffs such as sugar.
Value Added Tax on Betting and Gaming
Section 18 of the Finance Act, 2023 amends Part II of the Schedule to Chapter IV of the Finance Act [Chapter 23:04] by the repeal of items 7, 8, 9 and 10 such that the Value Added Tax chargeable on revenue from gaming and lotteries shall be 15%.
Offences and Penalties regarding fiscalisation
- The Value Added Act Tax [Chapter 23:12] was amended by the Finance Act, 2023 through the insertion of section 63A which provides for offences and penalties regarding failure by registered operators to issue fiscal tax invoices or receipts to buyers of goods or services or to the Authority.
- It also provides that it shall be an offence for anyone to sell, manufacture or distribute fiscal memory devices without the approval of the Authority.
- The section further penalizes tampering with an electronic fiscal device such that it fails to correctly record transactions which are subject to tax under the Value Added Tax Act.
Measures to protect value chain integrity and transparency, and to counter unfair competition by informal traders.
The Finance Act, 2023 amends the Value Added Tax Act to insert section 81A which amongst other things prohibits persons other that registered wholesalers and retailers from purchasing goods from manufacturers.
A person other than a registered retailer may purchase goods from a manufacturer only at intervals of not less than thirty days and up to a limit of not exceeding US$1000.00 per purchase.
Value Added Tax (General) (Amendment) Regulations, 2024 (No. 64)
The Value Added Tax (General) Regulations, 2024 which were made in terms of section 78 of the Value Added Tax Act [Chapter 23:12] were gazetted on the 9th of February 2024. The Regulations introduce certain goods and services which are exempted from paying value added tax by amending the Value Added Tax (General) Regulations, 2003 to replace the First Schedule thereof. Some of the key provisions are as follows:
(a) Exemption from Value Added Tax on goods and/or services which include, water supplied through a pipe for domestic use, supply of domestic electricity, rates charged by local authorities, goods and services supplied to the President of Zimbabwe, tobacco supplied on the floors in terms of the Tobacco Industry and Marketing Act [Chapter18:20], ancillary services supplied by Nat Pharm and road toll fees collected by ZINARA in terms of the Road Act [Chapter 13:18];
(b) Exemption on goods imported for the exclusive use of Foreign Government, Foreign diplomatic missions and other international representatives, designated by the Minister responsible for foreign affairs, the Head of State of Zimbabwe, the former Heads of State of Zimbabwe, the Government of Zimbabwe, covered by a Government Duty, Free Certificate issued by the Secretary of the Ministry concerned, Travelers’ cheques and bills of exchange, denominated in foreign currency, Importation of electricity, Publications and other advertising matter relating to fairs, exhibitions and tourism in foreign countries.
These Regulations also provide for specific goods and services which are exempted from paying Value added tax falling into specific commodity codes including agricultural equipment or machinery, fuel and fuel products, certain dairy products, sanitary wear products and unmanufactured tobacco.
For assistance with inquiries on Tax related issues, kindly got hold of our Corporate Law Practice Group on info@mmmlawfirm.co.zw
Are South African tourists visiting Zimbabwean game reserves liable for Vat on accommodation, food, safari charges etc?