VAT in Zimbabwe

VAT Overview

Value Added Tax (VAT) is a consumption tax charged on the supply of goods and services in Zimbabwe. Administered by ZIMRA under the Value Added Tax Act (Chapter 23:12), VAT is charged at each stage of the supply chain, with businesses collecting VAT on sales (output tax) and claiming credits for VAT paid on purchases (input tax). The difference is remitted to ZIMRA.

The standard VAT rate in Zimbabwe is 15%. Businesses whose annual taxable turnover exceeds US$60,000 must register for VAT. Those below the threshold may register voluntarily.

VAT Rates

Zero-Rated Supplies (0% VAT)

Zero-rated suppliers charge 0% VAT but can still claim input tax credits. Zero-rated items include:

• Exports of goods and services
• Basic foodstuffs: mealie meal, bread, milk, cooking oil, sugar, salt, fresh fruits and vegetables
• Agricultural inputs: seeds, fertiliser, animal feed
• Certain medicines and medical supplies
• Petrol and diesel (subject to separate fuel levy)
• International transport services

Exempt Supplies (No VAT)

Exempt suppliers do not charge VAT and cannot claim input tax credits. Exempt supplies include:

• Financial services (banking, insurance, lending)
• Medical and dental services
• Educational services (schools, universities)
• Residential rental accommodation
• Public transport (commuter omnibuses)
• Supply of water by local authorities

VAT Registration

Mandatory Registration

You must register for VAT if:

• Your taxable turnover exceeds US$60,000 per year (or US$5,000 per month on average)
• You reasonably expect your turnover to exceed US$60,000 in the next 12 months

Registration must be completed within 30 days of reaching the threshold. Late registration can result in penalties and back-dated VAT liability.

Voluntary Registration

Businesses below the US$60,000 threshold may register voluntarily. This can be beneficial if:

• You make significant purchases with VAT (you can claim input tax credits)
• Your customers are VAT-registered and prefer to deal with VAT-registered suppliers
• You export goods or services (claim refunds on inputs)

How to Register for VAT

1. Ensure you have a valid TIN (register with ZIMRA first if you don’t have one)
2. Log into TaRMS
3. Navigate to “Tax Registration” > “Additional Registration” > “VAT”
4. Enter your estimated annual turnover and nature of supplies
5. Upload proof of turnover (financial statements, bank statements, or invoices)
6. Submit the application
7. ZIMRA processes within 5-10 working days and issues your VAT number

Filing VAT Returns

VAT-registered businesses must file monthly returns using the VAT7 form on TaRMS.

Key Dates

What to Include on Your VAT Return

• Output tax: VAT collected on sales during the period
• Input tax: VAT paid on purchases (supported by valid tax invoices)
• Net VAT payable or refundable: Output tax minus input tax
• Zero-rated supplies: Value of zero-rated sales
• Exempt supplies: Value of exempt sales

VAT Invoicing Requirements

A valid tax invoice must include:

• The words “Tax Invoice”
• Supplier’s name, address, and VAT registration number
• Buyer’s name and address (for invoices over US$50)
• Invoice number (sequential)
• Date of issue
• Description of goods or services
• Quantity and unit price
• Total amount excluding VAT, VAT amount, and total including VAT

Without a valid tax invoice, you cannot claim input tax credits. Ensure all supplier invoices comply with these requirements.

VAT Compliance Tips

• Keep all tax invoices for at least 6 years — both issued and received
• File on time — even if you have no activity in a month, file a nil return
• Separate business and personal — only claim input tax on genuine business purchases
• Track your threshold — if your turnover approaches US$60,000, register proactively
• Apportionment — if you make both taxable and exempt supplies, you must apportion input tax