adminIn addition to the above, there are certain supplies of goods or services which are deemed to have been made. These include the disposal of a business as a going concern, or part of it which can be operated separately.
Tax Implications of the Disposal
The disposal of the business as a going concern is charged VAT at the standard rate of 15 percent of the value at which the business is disposed. However, this supply can be subjected to zero percent tax rate if the following conditions are fulfilled:
- The disposal is by an operator registered for VAT to another operator also registered for VAT.
- The person who disposes of the business and the recipient have agreed in writing that such business, or part of a business, is disposed of as a going concern, and
- At the time of concluding the agreement, the person who disposes of the business and the recipient have agreed in writing that such trade or part thereof, will be an income-earning activity on the date of transfer, and
- The assets which are necessary for carrying on such business or part of a trade are disposed of by the supplier to the recipient.
Where a business or part thereof is disposed of as a going concern and has continued to do business in goods and services forming the main purposes of such business or part thereof, and in addition partly for other purposes, such goods or services, if disposed of to such recipient, will be taken to form part of such business or part thereof.
If second-hand motor vehicles are included in a business or part of a trade being disposed of, such second-hand motor vehicles will only attract special excise duty in terms of the Customs and Excise Act.
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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