ZIMBABWE - Amendments to the VAT and customs legislation
The New Minister of Finance announced several changes to the VAT and Customs legislation, most of which took effect on or after 1 January 2019. In this article we highlight some of the key changes.
Claiming input VAT beyond the prescribed 12-month period
The VAT Act has been amended to allow for the extension of time for claiming the deduction of input tax beyond the prescribed 12 months. To qualify for the extension the taxpayer must satisfy the Commissioner that there was good cause for the delay in claiming the deduction.
Payment of VAT in the Currency of Trade
Starting 1 January 2019 VAT must be remitted in the currency in which it was collected (the so-called underlying currency).
The penalties for failing to pay VAT in the underlying currency in which it was received is 100% of the VAT payable and the penalty is payable in the underlying currency.
If the VAT amount is not settled within the required period and the taxpayer cannot demonstrate just cause for not remitting it in a timely fashion, the Zimbabwe Revenue Authority (the ZIMRA) will levy civil penalties at a rate of USD 30 per day up to a maximum of USD 5,430.
The notion of what constitutes a supply of imported services has been extended to include services supplied to locals by all non-resident service providers. The amendment broadens the scope of VAT on imported services and it will be an additional cost to business.
Duty payment in foreign currency for selected goods
Beginning 23 November 2018, customs duty on specified goods and on some passenger vehicles will be payable in foreign currency. Included in the list of specified goods are prepared foodstuffs, alcohol, cigarettes, all types of travel bags, bed and kitchen linen,and passenger/double cab vehicles.
Relief from duty for some manufactures
To avoid shortages and to encourage more production, starting 1 January 2019, selected manufactures are relieved of the obligation to pay duty. Manufacturers benefitting from this relief include those in the dairy industry, the poultry industry with respect to fertilised eggs, the pharmaceutical industry, fertiliser manufactures, and importers of feminine hygiene products.