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Accounting, Tax

ZIMRA Audit-Navigating ZIMRA Audits-What the Taxpayer should know.

Published: 6 November 2025

The ZIMRA Voluntary Disclosure Program (VDP) is one of the most powerful tools a business has to manage and mitigate audit risk. It directly supports the article’s message that ZIMRA officers are understanding, provided the taxpayer demonstrates good faith.

Here is an elaboration on the specific details of ZIMRA’s VDP and how a business can utilize it effectively.

 

🤝 ZIMRA’s Voluntary Disclosure Program (VDP): A Path to Penalty Relief

 

The Voluntary Disclosure Program is essentially an olive branch from ZIMRA, offering taxpayers a structured way to correct past non-compliance—whether it was due to a genuine error, ignorance of the law, or a deliberate omission—before ZIMRA’s enforcement machinery catches the discrepancy.

The core benefit is the full or significant remission of penalties, which can easily cripple a business if they are imposed at their statutory maximum (often up to 100% of the tax due).

 

1. Key Features and Eligibility

 

The VDP is designed to encourage proactive compliance. For a disclosure to qualify, several core requirements must typically be met:

Feature Description
Voluntary The disclosure must be initiated by the taxpayer (or their representative) before ZIMRA has formally notified the taxpayer of an audit, investigation, or recovery action covering the period and tax type being disclosed.
Full and Complete The taxpayer must make a true, full, and complete disclosure of all omitted income, under-declared tax, or non-compliance obligations (e.g., failure to register or submit returns).
Covers All Tax Types The program generally covers all tax heads, including Income Tax, Value Added Tax (VAT), Pay As You Earn (PAYE), Withholding Taxes, and sometimes Customs and Excise duties.
No Refund The disclosure cannot be for the purpose of claiming a tax refund from ZIMRA. It is strictly for rectifying underpayments/non-compliance.

That’s an excellent request! The ZIMRA Voluntary Disclosure Program (VDP) is one of the most powerful tools a business has to manage and mitigate audit risk. It directly supports the article’s message that ZIMRA officers are understanding, provided the taxpayer demonstrates good faith.

Here is an elaboration on the specific details of ZIMRA’s VDP and how a business can utilize it effectively.

 

🤝 ZIMRA’s Voluntary Disclosure Program (VDP): A Path to Penalty Relief

 

The Voluntary Disclosure Program is essentially an olive branch from ZIMRA, offering taxpayers a structured way to correct past non-compliance—whether it was due to a genuine error, ignorance of the law, or a deliberate omission—before ZIMRA’s enforcement machinery catches the discrepancy.

The core benefit is the full or significant remission of penalties, which can easily cripple a business if they are imposed at their statutory maximum (often up to 100% of the tax due).

 

1. Key Features and Eligibility

 

The VDP is designed to encourage proactive compliance. For a disclosure to qualify, several core requirements must typically be met:

Feature Description
Voluntary The disclosure must be initiated by the taxpayer (or their representative) before ZIMRA has formally notified the taxpayer of an audit, investigation, or recovery action covering the period and tax type being disclosed.
Full and Complete The taxpayer must make a true, full, and complete disclosure of all omitted income, under-declared tax, or non-compliance obligations (e.g., failure to register or submit returns).
Covers All Tax Types The program generally covers all tax heads, including Income Tax, Value Added Tax (VAT), Pay As You Earn (PAYE), Withholding Taxes, and sometimes Customs and Excise duties.
No Refund The disclosure cannot be for the purpose of claiming a tax refund from ZIMRA. It is strictly for rectifying underpayments/non-compliance.

 

2. Utilizing the VDP: The Business Case

 

The decision to use the VDP is a strategic business decision that prioritizes long-term tax health over short-term risk avoidance.

 

A. When to Use the VDP: The “Tax Health Check”

 

A business should consider VDP immediately after discovering any of the following through an internal review or a professional “Tax Health Check”:

  • Omitted Income/Understated Turnover: Revenue that was not included in tax returns (Income Tax, VAT).
  • Incorrect Expense Claims: Deducting expenses that are not allowed under the Income Tax Act.
  • PAYE Errors: Mistakes in calculating or remitting PAYE, often involving un-taxed staff benefits or allowances.
  • VAT Misstatements: Incorrect application of VAT rates (zero-rated vs. standard-rated), or incorrect claims for input tax.
  • Non-Registration: Failure to register for a specific tax head (e.g., VAT, PAYE) after meeting the required threshold.

 

B. The Core Benefit: Penalty Mitigation

 

The major incentive for a business to disclose voluntarily is the waiver or substantial remission of penalties, civil penalties, fines, and additional taxes.

  • Tax Due: The principal amount of tax that was underpaid (or not paid) must still be paid.
  • Interest: Interest charges on the outstanding principal amount, as provided in the law, are generally not waived and remain payable.
  • The Waiver: By waiving the penalty (which can be 100% or more of the tax due), the VDP can save the business a significant amount of money and ensure its financial stability.

 

3. The Application Process (Simplified)

 

While exact procedures can change, the process generally follows these steps:

  1. Preparation and Quantification: The business (ideally with a tax consultant) meticulously quantifies the exact principal tax amount due for each period and tax head that was non-compliant. The documentation (e.g., revised schedules, returns) is prepared.
  2. Formal Application: The taxpayer submits a formal Voluntary Disclosure Application Form (VDA01) to ZIMRA, detailing the specific non-compliance and the reasons for it. Honesty and completeness are paramount here.
  3. Proposed Payment Plan: The application typically includes a proposed payment plan for settling the principal tax and applicable interest. This demonstrates the business’s commitment to compliance.
  4. ZIMRA Review: ZIMRA reviews the application. If satisfied that the disclosure is truly voluntary, full, and complete, they accept the application and issue a formal response.
  5. Payment and Finalization: The business adheres to the agreed-upon payment plan. Once all amounts (tax and interest) are settled, the matter is concluded, and ZIMRA assures that the disclosed information will not trigger an audit or investigation.

 

💡 Strategic Takeaway

 

The VDP transforms a potential penalty into a manageable financial obligation. For the business community, it is the best mechanism to clear the tax slate, obtain a tax clearance certificate (ITF 263) necessary for doing business in Zimbabwe, and build the “cooperative relationship” with ZIMRA mentioned in the original article. It is the practical demonstration of the statement: “ZIMRA offers are the most understanding enforcers”—they are understanding toward those who approach them in good faith.

 

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