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Withholding of Value Added Tax was introduced with effect from 1 January 2017 and some registered operators have since being appointed as VAT Withholding Tax agents.
The VAT Witholding Tax agents’ role is to withhold a portion of the VAT when paying their suppliers who are registered for VAT.
What is Value Added Withholding Tax?
It is a tax withheld by appointed agents when they pay their suppliers for the acquisition of taxable goods and services. A list of appointed agents is available on the ZIMRA website.
From whom should the tax be withheld?
VAT withholding agents should withhold from their suppliers who are registered for VAT. VAT withholding tax shall be withheld on payments of standard rated supplies.
No VAT shall be withheld on payment for the supply of exempt and zero-rated supplies.
What is the rate of Value Added Withholding tax?
The rate of Value Added withholding tax shall be 1/3 of the output tax (VAT charged).
In cases where payment of the supply is made in instalments, VAT shall be withheld on the output tax on each instalment
What is the supplier supposed to do?
The supplier must:
Receive a VAT withholding tax certificate from the agent.
Claim the VAT withheld as a credit on submission of VAT returns.
Attach a schedule of amounts withheld by various agents to the VAT return.
Keep the tax certificates obtained from withholding agents for a period of six years
NB: The VAT withholding tax deducted will reduce the amount of VAT payable during the tax period or increase the refundable amount.
Should a supplier supply less goods and or services because VAT has been withheld?
The amount withheld is VAT and it is remitted to Zimra by the agent. The supplier claims the tax as a credit on the VAT return which means the tax is an advance payment. Therefore the suppliers is not supposed to supply less goods or services following the withholding of the tax.
My Taxes, My Duties, Building my Zimbabwe!
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.
To contact ZIMRA: WhatsApp line: +263 782 729 862. Visit our website: www. zimra.co.zw. Follow us on Twitter : @Zimra_11. Like us on Facebook : www.facebook.com/ZIMRA.11 Send us an e-mail : [email protected]/[email protected]. Call us (Head Office): 0242-758891/5; 790813; 790814; 781345; 751624; 752731.
