adminWhat is deferment of VAT?
l Deferment of VAT is a temporary postponement of paying VAT on importation of specified goods of a capital nature.
l The goods should have been imported for own use by the importer and the VAT amount to be deferred should be at least US$4 800.
l The deferment is for a period not exceeding 90 days from the date of importation.
l It is granted on application to the Commissioner-General of Zimra.
Who qualifies for deferment?
l Any person who produces proof to the satisfaction of the Commissioner-General of Zimra that the imported goods are of a capital nature and will be used for commercial purposes.
l This includes sole traders, companies and partnerships whose tax record is up to date.
The application should:
l Be in writing quoting the business partner (BP) number and should be submitted to the Zimra port of clearance.
l Specify the goods on which deferment is being applied for and the relevant industry for those goods.
l Include a copy of the invoice as proof of the value of goods to be imported.
l Specify the period for deferment required and this should not exceed three months.
l Include a declaration from the importer to the effect the equipment or machinery will not be sold without prior permission of the Commissioner-General of Zimra.
l Be supported by a letter from the applicant’s parent ministry confirming the applicant’s trade and an approval letter from the Ministry of Finance confirming that the goods are of a capital nature.
Which goods are of a capital nature?
Goods of a capital nature in this context refer to specific prescribed plant, machinery or equipment used exclusively for:
l Mining purposes on a registered mining location as defined in the Mines and Minerals Act [Chapter 21:05]; or
l Manufacturing or industrial purposes in connection with a factory (including spare parts required for the purpose of maintaining or refurbishing such plant, equipment or machinery);
l Agricultural purposes (including spare parts required for the purpose of maintaining or refurbishing such plant, equipment or machinery);
l The aviation industry (including spare parts required for the purpose of maintaining or refurbishing aircraft and such plant, equipment or machinery);
l Medical purposes.
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.
What happens if one fails to settle the deferred VAT?
l Deferred VAT which is not settled on due date may result in the VAT deferment facility being withdrawn and may also be subject to interest and penalty charges.
Can one claim exemption from payment of deferred VAT?
l The VAT Act empowers the Commissioner-General of Zimra to levy VAT on importation of goods.
l Once the VAT is deferred it becomes a liability to the State which has to be paid. The fact that one may claim the VAT as input tax does not exempt them from paying the VAT due.
l Exemptions are clearly stated in Section 11 of the VAT Act and deferred VAT is not included in the exemptions.
l Article submitted by the Zimbabwe Revenue Authority. To contact us:
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