adminDID you know that any trader who deals in VAT chargeable goods or services and whose sales for the year are US$60 000 or more is supposed to be registered for VAT. The trader should charge VAT and remit it on the prescribed dates.
Penalties and interest are chargeable if a client fails or delays to pay VAT as prescribed in subsection (1) of Section 28 of the VAT Act (Chapter 23.12).
A delay or failure to pay VAT on due dates attracts penalty at the rate of 100 percent of the tax due as per Section 39 (2) (a) (i) of the VAT Act. Interest is charged at prescribed interest rates as per Section 39(2) (a) (ii) of the VAT Act.
Where the client manages to prove that the non-payment or late payment of VAT was not due to intent to evade the payment of the tax, the penalty and interest charged can be reduced to a certain extent or be completely waived.
Penalties and interest are also charged where a client omits some income when lodging the VAT returns or where false information submitted results in the client paying less VAT or having an undeserved refund.
Where it can be proved that the client’s failure to pay VAT, delay in paying VAT and/or submission of incorrect return was due to a deliberate intention to evade payment of tax the client will be required to pay additional tax in terms of section 66 of the VAT Act (Chapter 23.12).
The additional tax is equal to the tax due. This therefore means that the client will be required to pay over and above the tax pay-able additional tax (100 percent) plus the penalty (100 percent) and interest.
Below is an illustration of penalties payable in addition to interest calculated for clarity:
Established tax due to understatement of sales US$33 000
Additional tax US$33 000
Penalty at 100% US$33 000
Total Tax due
excluding interest US$99 000
Clients are therefore urged to correctly complete the VAT return, pay the correct tax on time in order to avoid the extra expense in the form of additional tax, penalty and interest.
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.
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