The Zimbabwe Revenue Authority (ZIMRA) on Sunday called on businesses to be ready to effect a 0.5 percentage point reduction in value-added tax (VAT) which comes into effect on January 1 2020.
The tax collector’s directive comes after Finance and Economic Development Minister Mthuli Ncube, in his 2020 National Budget Presentation, announced a reduction of VAT to 14.5 per cent from 15 per cent effective next month. ZIMRA said in a statement:
Registered operators, businesses registered for VAT and those that require to register, should ensure that they are ready to implement the new rate of tax.
Accounting systems, transacting systems and devices for recording taxable transactions (fiscal devices) should be adjusted accordingly in time for implementation.
According to ZIMRA, VAT is an indirect tax on consumption, charged on the supply of taxable goods and services. It is levied on transactions rather than directly on income or profit and is also levied on the importation of goods and services.
The tax was introduced in 2004 to replace the former sales tax regime.