Danger of not registering after surpassing the Value Added Tax (VAT) registration Threshhold of $25,000.00

Failing to register for Value-Added Tax (VAT) in Zimbabwe can lead to significant financial and compliance consequences. Zimbabwean Legal Tax Statute stipulates that a person should register for VAT when

1. After computing at the end of each trading month the total value of taxable supplies by all trades, branches or divisions for the past 12 months. Where the total exceeds the prescribed amount of US$25,000.00, or (US$2,083 per month), the person becomes liable to register for VAT purposes.
2. If however, after estimating the total value of supplies for the next 12 months a person expects to exceed the prescribed amount, such a person has become liable for registration.

The above is know as compulsory registration.

Failure to register for VAT will result in

1. Registration in retrospective.
2. Penalties
3. Interests

It is crucial that businesses monitor their cashflows so that they know when to register for Value Added Tax.

Requirements for VAT registration.

VAT Registration Requirements

1) Tax payer should have an average of us$2,083.33 sales per month. Should have sales reaching $25 000 or above.

2) Sales schedule from the time of commencement of trade to date

3) Sales Invoices from the time of commencement of trade to date showing customers name and telephone numbers OR confirmed and signed contracts.

4) Sales projections schedule for the next 12 months

5) Bank statement from date of commencement of trade, stamped by the bank and corresponding with the declared sales volumes.

6) Letter appointing public officer

7) Lease Agreement / Title deed