In terms of Section 50A of the Value Added Tax (VAT) Act (Chapter 23:12) the Commissioner General of Zimra may appoint any registered operator who purchases goods from other registered operators to be a Value Added Withholding Tax agent.
To this end and with effect from April 1, 2017, the Zimra Commissioner General appointed 20 registered operators, mainly in the mining sector, as Value Added Withholding Tax agents.
What is Value Added Withholding Tax?
It is a tax withheld by appointed agents when they pay their suppliers for the acquisition of taxable goods or services. The tax shall be withheld by the appointed agents with effect from April 1, 2017.
From whom should the tax be withheld?
Value Added Withholding Tax agents should withhold from their suppliers who are registered for VAT. Value Added Tax shall be withheld on payments for the supply of standard rated supplies only and not on exempt and zero rated supplies.
Value Added Withholding Tax should not be withheld on the following transactions: Payments for licences, levies, rates, electricity, telephone, cellphone, internet or data services
Payments by cash or debit cards for over the counter purchases
Invoice amounts not exceeding US$1,000 in aggregate per annum What is the rate of Value Added Withholding Tax?
The rate of Value Added Withholding Tax shall be two thirds of the Output Tax. In cases where payment of the supply is made in instalments, the tax shall be withheld on the output tax on each instalment.
What are the obligations of the Value Added Withholding Tax Agents? Appointed agents should:
Withhold two thirds of the Output Tax from each amount to be paid to their suppliers of taxable goods and servicesIssue a VAT Withholding Tax certificate to such supplier in respect of the amount withheld
Submit returns (Rev 5 Form) and remit amounts so withheld to the Zimra Commissioner General on or before the 15th of the following monthAttach schedule of the Value Added Withholding Tax to the Rev 5 Form.
How VAT withheld by an agent is treated? Suppliers of goods or services shall claim the Value Added Tax withheld on submission of their VAT return for the respective tax period
A schedule of the amounts withheld by various agents must be attached to the VAT returnVAT Withholding Tax certificates obtained from withholding agents should be kept for six years like all other records
The Zimra Commissioner General shall set off or refund any excess credits if all tax heads are up to dateThe refund shall be processed through the normal VAT refund processing system already in place.
This article was compiled by the Zimbabwe Revenue Authority for information purposes only. Zimra shall not accept responsibility for loss or damage arising from use of material in this article and no liability will attach to the Zimbabwe Revenue Authority.
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