What is Value Added Withholding Tax?

It is tax withheld by appointed agents when they pay their suppliers for the acquisition of taxable goods and services.Withholding of Value Added Tax (VAT) was introduced with effect from 1 January 2017.

ZIMRA appointed agents to withhold the VAT. The VAT Withholding Tax agents’ role is to withhold a portion of the VAT when paying their suppliers who are registered for VAT.

Whom should the tax be withheld?

VAT withholding agents should withhold tax 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 installments, VAT shall be withheld on the output tax on each installment.

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.

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 supplier is not supposed to supply less goods or services following the withholding of the tax.

How is the VAT Withholding Tax paid?

VAT withholding tax agent shall withhold and remit to ZIMRA from each amount to be paid to an operator, in the currency in which the goods and services concerned were purchased.