ZIMBABWE Law and Practice Contributed by: Nellie Tiyago and Rudo Magundani, Scanlen & Holderness
VAT The Zimbabwe tax system also charges VAT on the supply of taxable goods and services. The principal legislation is the VAT Act, which makes provision for taxation in respect of the importation and exportation of goods. A company is liable to register for VAT if the value of taxable supplies or services exceeds or is expected to exceed USD25,000, or the equivalent in ZWG, within a period of 12 months. Every registered operator is required, in accordance with Section 28 of the VAT Act, to submit returns to the Commissioner of Taxes every month, calculate the VAT due on the return and make payment of such VAT. The standard rate of VAT is 15%. Collection of VAT for Community Development In 2024, a 1% levy was introduced on the gross pro - ceeds of lithium, black granite and other cut or uncut dimensional stones and quarry stones. This applies to local sales and exports, and the funds will be ring- fenced for community development. Exemption of Certain Goods, Services and Imports From Payment of VAT As of 1 January 2024, the law permits additional exemptions from payment of VAT for certain catego - ries of goods and services, including: • water supplied through a pipe for domestic use, the supply of domestic electricity and the importa - tion of electricity (rates charged by a local author - ity); • agriculture-related products, including certain items of agricultural equipment or machinery, unmanufactured tobacco supplied on auction floors in accordance with the Tobacco Industry and Marketing Act, other unmanufactured tobacco not sold on the auction floor, commission charges on tobacco sales on auction floors, animal feed and animal medicines, fertiliser, pesticides, plants, seeds, live cattle, pigs, goats, sheep and bovine semen, poultry meat and kapenta; • fuel and fuel products, ethanol, road toll fees col - lected by the Zimbabwe National Road Administra - tion, pipeline transportation, handling and storage services supplied for the purposes of delivery of petroleum products (fuel) by the National Oil Infra - structure Company of Zimbabwe, medicines and
medical supplies, ancillary services supplied by the National Pharmaceutical Company (“Nat Pharm”), including storage, handling and distribution, and goods and services provided by medical statutory bodies; and • tourism, including publications and other advertis - ing matter relating to fairs, exhibitions and tourism in foreign countries. In addition to exemptions from the payment of VAT, the law also provides for a “zero rating” for specified goods and services, such as the supply of gold to Fidelity Gold Refinery (Private) Limited. A zero rating also applies to the sale of a going concern and the imports and exports of certain goods. In 2025, Zimbabwe updated its VAT exemptions through SI 2025-001, expanding the list of goods and services exempt from VAT under the VAT Act (Chapter 23:12). The key VAT-exempt categories (2025 update) are: • basic goods and services – unprocessed staple foods (eg, maize meal, rice, salt), educational ser - vices provided by registered institutions, medical and health services provided by licensed practi - tioners, and water and sanitation services provided by local authorities; • agricultural inputs – fertilisers, seeds and pesti - cides used in commercial farming, and animal feed and veterinary products; • financial services – banking and insurance services (excluding advisory and consultancy), and pension fund management; and • specific imports – capital equipment for approved SEZs. Employment Companies operating in Zimbabwe must deduct PAYE taxes from employees earning above the tax-free threshold. In respect of PAYE, Zimbabwe also oper - ates a source-based system. The deducted amount must be submitted to the Zimbabwe Revenue Author - ity (ZRA) by the tenth of the following month. Late pay - ment will incur a 100% penalty and 10% annual inter - est on the outstanding tax. Employers are required to maintain comprehensive records of employee com -
773 CHAMBERS.COM
Powered by FlippingBook