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  • fixed property – the time is the earlier of registration of transfer or the date of any payment or, where no transfer or payment is made, the date of the agreement.

Value of supply

The general rule is that where the consideration is in money, the value of the supply is the amount of money less VAT. Where the consideration is not in money, the value is the open market value (OMV). Various specific rules apply, such as in the following cases:

  • connected persons, where no consideration is charged, or where goods or services are supplied for less than the OMV – the value is the OMV if the recipient is not able to claim the full input;

  • cessation as a registered operator or transfer of goods or services to a branch outside Zimbabwe – the value is the lesser of cost or OMV;

  • instalment credit agreement – the value is the cash value (being the price of the goods or services without any interest and other incidental charges);

  • adjustment in respect of change in use of assets in the trade – the value is the OMV;

  • fringe benefits – the value is the cash equivalent of the benefit;

  • public or local authorities – the value is the amount of the cash value (capital balance);

  • betting – the value is the amount received;

  • take-back bet – the value is the amount received as winnings;

  • tokens, vouchers and stamps with monetary face value – no supply is made until exchanged;

  • supply of entertainment where no input tax deduction is allowed – value is nil;

  • supply of medical or dental services to medical aid members – value is nil for the medical aid scheme;

  • mixed supplies (taxable and exempt) – value must be apportioned;

  • where any supply is made for no consideration – the value is nil, unless the connected persons rule applies.

VAT compliance

Accounting basis and tax periods Tax periods are as follows –

  • Category A and B: 2-month periods;

  • Category C: 1-month periods;

  • Category D: Any other tax period (except if the Category C tax period was allocated to the registered operator). Category D may be applied for by the farming, pastoral and agricultural sector.

The VAT Act provides for the above categories. However, with effect from November 2008, the Commissioner has directed that all traders now fall in Category C even though the Act still provides for categories A, B and D. Individual traders have been notified and all new registrants are allocated category C.

Returns and payment of VAT

A VAT return in the prescribed form must be submitted to ZIMRA for each tax period. The VAT return must reach ZIMRA not later than the fifth day of the month commencing after the end of a tax period, or where such day falls on a public holiday or a weekend, the last business day before that date.

With effect from 1 February 2009, a ‘mid-term tax’ was introduced into the VAT system requiring traders to remit to ZIMRA by the 15th day of the tax

period the VAT collected or accrued by the registered operator from the first to the 14th day of the tax period. This amount will be netted off the amount of VAT due as determined on the final return at the end of the tax period.

Payments are generally to be made in cash or by cheque, and at the same time when a return is submitted.

Interest and penalties

There are two different ways of penalising a registered operator, namely:

  • penalty and interest for failure to pay VAT when due; and

  • additional tax in the case of evasion or causing a refund in excess of that properly refundable.

For any month(s) while VAT remains unpaid an additional percentage interest at the prescribed rate per month or part thereof will become payable. The effective rate is not subject to a maximum. This interest can only be charged from the first day of the month following the month in which the return is due. The interest rate applicable is 5% above the LIBOR (London Inter-Bank Offered Rate) for the month immediately preceding each month or part thereof in which the tax remains unpaid.

A penalty of up to 100% of the principal sum involved in the offence may be levied.


A registered operator will be entitled to a refund of VAT when, in a particular tax period, his input tax exceeds his output tax.

A routine refund must be paid to the registered operator within the prescribed period (currently 30 days) after the date on which the VAT

PricewaterhouseCoopers 183

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