VAT was introduced in Zimbabwe with effect from 1 January 2004 to replace sales tax. The VAT legislation is contained in the Value added tax Act (Chapter 23:12). The VAT system is administered by the Zimbabwe Revenue Authority (ZIMRA), the head of which is the Commissioner-General.
Rates and scope
Rates Zimbabwe has two different VAT rates:
the standard rate of 15%; and
the zero rate of 0%.
VAT is not charged on commodities as such, but rather on the supply of commodities, and is imposed at the prescribed rates on the following:
the supply of any goods and services in Zimbabwe by a registered operator in the course or furtherance of a trade (enterprise);
goods imported into Zimbabwe under certain circumstances; and
services imported into Zimbabwe under certain circumstances.
A registered operator is a person who is registered or is required to be registered for VAT. It is the person, not the trade, who is registered for VAT. A person is only registered once for all the trades/divisions/branches carried on, unless permission is granted to register them separately.
has no fixed place of abode or business;
does not keep proper accounting records;
has not opened a banking account; or
has previously been registered as a registered operator under VAT or under the repealed sales tax Act and failed to perform his duties under either Act.
Any person who carries on or intends to carry on any trade(s) in the course of which taxable supplies (including zero- rated supplies) are made, and whose taxable value of supplies exceeds the prescribed limit, must register for VAT.
Group or branch registration
Group registration is not permissible, as the law requires each separately registered entity to register individually. In exceptional circumstances, separate persons carrying on specified trades may, under an anti-avoidance provision, be deemed to be one for purposes of registration.
A person is liable to register at the end of any month when the total value of all his supplies of goods or services (turnover) has exceeded the prescribed amount in the preceding period of 12 months, or there are reasonable grounds for believing that the total value of supplies of goods and services that will be made in the following 12 months will exceed the prescribed amount.
The threshold for compulsory registration (with effect from 30 January 2009) is US$60,000.
However, registration will not be required if the prescribed amount has been or will be exceeded as a result of:
sales due to cessation of or reduction in the size of the business;
sales due to replacement of capital assets; or
abnormal circumstances of a temporary nature.
A person may apply for voluntary registration even if the total value of taxable supplies is less than the prescribed amount. The person must satisfy the Commissioner that a trade is carried on. However, no minimum threshold has been set by the Commissioner and a decision to register is made on an individual basis.
The Commissioner may refuse to register a person for voluntary registration if the applicant:
A registered operator may apply for separate registration of its different trades, branches or divisions carried on by it, provided they are separately identifiable and there is an independent system of accounting for each such division or branch.
A nonresident can only register through a resident representative registered operator.
Application for registration
Application for compulsory and voluntary registration must be made on the prescribed registration form (VAT1), together with any other documents that the Commissioner may require from time to time (such as company registration particulars and bank details
VAT2 and VAT3). For compulsory
registration, this must be completed not later than 30 days from the date of first becoming liable for such registration.