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Did you know that Value Added Tax (VAT) may be deferred in certain instances? VAT is normally payable on importation of goods or removal of goods from Bond. Goods cannot be released until the VAT is paid in full.
What is deferment of VAT?
- Deferment of VAT is an officially sanctioned temporary postponement of paying VAT on importation of specified goods of a capital nature.
The goods should have been imported for own use by the importer and the VAT amount to be deferred should be at least $4,800.
- The deferment is for a period not exceeding 90 days from the date of the deemed importation
- It is granted on application to the Commissioner General of the Zimbabwe Revenue Authority (Zimra).
Who qualifies for deferment?
- Any person who produces proof to the satisfaction of the Commissioner General of Zimra that he or she has imported goods of a capital nature for his or her own use
- This includes companies and partnerships as well whose tax records are up to date.
How do I apply?
- The application should be in writing quoting your business partner (BP) number and should be submitted to your nearest Zimra office
- Specify the goods on which deferment is being applied for and the industry which you operate under.
- Copy of the invoice as proof of goods imported and value of such good should be attached.
- Specify the period for deferment you require which should not be more than three months.
- Declare that the goods are for own use and will not be disposed of even after deferment period without notifying the Commissioner General of Zimra.
What are goods of a capital nature?
Goods of a capital nature in this context refer to specific prescribed plant, machinery or equipment used exclusively for
- Mining purposes on a registered mining location as defined in the Mines and Minerals Act (Chapter 21:05); or
- Manufacturing or industrial purposes in, on or in connection with a factory (including spare parts required for the purpose of maintaining or refurbishing such plant, equipment or machinery);
- Agricultural purposes (including spare parts required for the purpose of maintaining of refurbishing such plant, equipment or machinery);
- The aviation industry (including spare parts required for the purpose of maintaining or refurbishing aircraft and such plant, equipment or machinery);
- Note that goods of a capital nature do not cover motor vehicles intended or adapted for use on roads or capable of being so used.
- The goods are prescribed by the Minister of Finance and Economic Development in consultation with the minister responsible for the particular industry.
What happens if I fail to settle the deferred VAT debt?
- Deferred debts which are not settled on due date may result in the VAT deferment facility being stopped or withdrawn.
- Deferred VAT debts may also be subject to interest and penalty charges
What happens if I sell the goods during or after deferment period?
- Where goods that enjoyed deferment of tax are sold, re-exported or disposed of before or after expiry of the deferment period instead of being used for the declared use, the importer will be required to pay in addition to any tax for which he or she is liable on such disposal the outstanding deferred amount, a penalty and interest at prevailing rates.
Disclaimer
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.
To contact Zimra:
Visit our website : www. zimra.co.zw
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Send us an e-mail : [email protected]
Call us (Head Office) : 04–758891/5; 790813; 790814; 781345; 751624; 752731;
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