The 15 Percent Zimbabwean VAT Takes Off following the previous announcement late last year by the Zimbabwe Revenue Authority (Zimra) that the rate of the Value Added Tax will witness an increase to 15%.
Recall that the Zimbabwe Revenue Authority (Zimra) made it clear that starting from January 1, 2023, there would be a 0.5% increase in the VAT rate from 14.5% to 15%.
The increment is also empowered by the promulgation of the Following the Finance Act Number 2 of 2022. It is on the powers of the legislation that Zimra recently declared in a public notice that businesses should commence the deduction of a 15% VAT rate on products purchased by consumers.
15 Percent Zimbabwean VAT Takes Off: More on the Directive
Following the new directive by Zimra, businesses are also directed to set their fiscal devices to accurately record the new VAT rate. This will also prevent inaccuracies in charging VAT.
All VAT-registered operators are instructed to meet with their respective approved suppliers and see to it that these changes are effected to meet up with the timelines of Zimra.
Businesses and consumers are admonished to adhere to the change and work collaboratively with the Zimbabwe Revenue Authority (Zimra) to ensure things run smoothly.
A Perspective into VAT
The Value Added Tax (VAT) is a levy charged on the consumption of goods and services to generate revenue for the government.
The VAT rate applied in each country of the world differs, as it is up to individual governments or administrations to decide what rate they will like to apply.
The inconvenience of VAT for consumers, especially when there is an increment, is the fact that it slightly adds to the price of the goods or service which means they would have to pay more whenever they purchase such goods or services.
In the case of retailers and service providers, there is a need for them to adjust their prices to include the increment.
VAT’s Recent Impressive Run
It is important to state that Value Added Tax, VAT has proven to be a viable asset in Zimra’s inventory as it played a vital role in the authority’s impressive tax collection during the second quarter, Q2 of 2022.
Recall that in Q2 2022, Zimra surpassed its collection record by over eight percent, collecting $178,77 billion against a target of $165,41 billion.
The Breakdown of the Second Quarter of 2022 shows that individuals contributed 17,93 percent of total revenues followed by Value Added Tax at 16,34 percent, companies at 15.33 percent, excise duty at 11.52 percent, and intermediated money transfer tax at 10.27 percent.
The above statistics show that Zimbabwe’s tax administration stands on three major pillars; Companies Income Tax, Personal Income Tax and Value Added Tax, VAT.
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