TaRMS and FDMS: The Mechanics of VAT Compliance

As the integration between TaRMS and the Fiscalisation Data Management System (FDMS) is the single most critical factor in ZIMRA’s effort to combat VAT fraud and enforce compliance.

Here are the specifics of how this integration works and its profound impact on VAT-registered businesses in Zimbabwe:

🔗 TaRMS and FDMS: The Mechanics of VAT Compliance

The integration of TaRMS and FDMS creates a complete, closed-loop system for tracking VAT. FDMS is the central repository for all sales data captured by Fiscal Devices at the point of sale (POS), while TaRMS uses this data to manage the taxpayer’s entire tax profile.

1. Data Flow: From Sale to ZIMRA Ledger

The process works as a real-time (or near real-time) validation system for every business-to-business (B2B) transaction:

1. Sale and Fiscalisation: A VAT-registered seller processes a sale through their fiscal device (e.g., a fiscal printer or cash register). The device now mandatorily captures the buyer’s details (Name, Address, TIN, and VAT number) for B2B transactions.¹

    

2. Data Transmission: The fiscal device generates a digital receipt (a JSON file), signs it, and instantly transmits this data to the FDMS central server via the internet.

    

3. Invoice Validation: The device issues a physical Fiscal Tax Invoice to the buyer, which includes a QR code referencing the data transmitted to FDMS. The buyer can verify this QR code on the ZIMRA FDMS portal to confirm the invoice is valid and recorded.

    

4. Data Import to TaRMS: The FDMS system seamlessly pushes the validated sales and purchase data into the corresponding ledgers within TaRMS.

    

2. The Impact on Input Tax Claims (The Core Audit Tool)

This integrated data flow fundamentally changes how businesses claim Input VAT (the VAT paid on purchases).

• Automatic Input Tax Schedule: When a VAT-registered operator logs into the TaRMS Self-Service Portal (SSP) to file their VAT return (VAT 7), the system automatically pre-populates or provides the data for their Input Tax Schedule.

   

• The Match Rule: The system only makes Input VAT data available for selection if ZIMRA has a corresponding Output VAT record from the supplier in its FDMS/TaRMS database.

Crucially, if the supplier does not fiscalise the sale and transmit the data to FDMS, the buyer will find it extremely difficult, if not impossible, to claim the Input VAT on that purchase.

 

This creates a powerful incentive for buyers to demand fully compliant Fiscal Tax Invoices and ensures that the VAT claimed as a deduction by one business is accounted for as revenue by another.

3. Benefits of Automation in TaRMS

The integration automates several processes previously prone to manual errors and manipulation:

Consequences of Non-Compliance in the TaRMS-FDMS Era

The integration creates a high-stakes environment for non-compliant businesses:

1. Sales Under-Declaration: If a business fails to record all sales using the fiscal device, the mismatch between its bank deposits/inventory and the low sales recorded in FDMS will trigger an immediate, automated audit flag in TaRMS.

2. Input Tax Denial: If a buyer cannot claim Input VAT because their supplier did not fiscalise the sale, they can report the supplier to ZIMRA, effectively turning buyers into compliance enforcers.

3. Fiscal Device Penalties: The failure to use or upgrade fiscal devices to transmit the mandatory buyer profile data can lead to ZIMRA imposing daily penalties of up to US$25 per point of sale.

In summary, the TaRMS-FDMS integration shifts ZIMRA from being a reactive, post-filing audit authority to a real-time data matching and compliance enforcement body.¹ This digital leap is expected to significantly narrow the VAT gap in Zimbabwe.