This is a detailed analysis of Statutory Instrument (S.I.) 140 of 2024, which introduces significant amendments to the Value Added Tax (General) Regulations in Zimbabwe. The core impact of this S.I. is to expand the list of goods and services that are Zero-Rated or Exempt from Value Added Tax (VAT), primarily focusing on promoting key economic sectors (Agriculture, Energy, and Tobacco) and supporting vulnerable groups (Persons with Disabilities).
📝 Analysis of S.I. 140 of 2024: VAT Amendments
The S.I. amends the First Schedule of the Value Added Tax (General) Regulations, 2003 (S.I. 273 of 2003).
1. Tobacco Sector Adjustments (Sections 2 & 5)
This section aims to clarify and harmonize the VAT treatment of unmanufactured tobacco.
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Change: Repeals and substitutes paragraphs 8 and 9 of Part I (Exempt Supplies) and repeals/substitutes paragraph 6 of Part II (Zero-Rated Goods).
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Impact:
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Unmanufactured Tobacco: The S.I. moves the definition of the specific types of unmanufactured tobacco (Flue cured, Burley, Dark fired, etc.) into the Part II (Zero-Rated) list.
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Practical Effect: Unmanufactured tobacco sold on auction floors or otherwise remains Zero-Rated. This ensures tobacco farmers, who are critical export earners, do not charge VAT on their primary product but can still claim input VAT on their purchases (e.g., fertilizers, chemicals, machinery). This is a vital measure to support the competitiveness of the tobacco sector.
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2. Strategic Economic Sector Support (Section 3)
This section introduces new Exempt Supplies (Part I of the First Schedule) and Zero-Rated Goods (Part II of the First Schedule).
| Section | New Provision | VAT Status | Sector/Impact |
| 3(22) | Pipeline transportation, handling, and storage services for fuel by NOIC (National Oil Infrastructure Company) | EXEMPT | Energy: A supply is VAT Exempt if it is listed in Part I. Exempting this service directly on fuel logistics lowers the cost base for fuel importation and distribution, which should translate into lower final prices for consumers and businesses, reducing inflationary pressure. |
| 3(23) | Live cattle, pigs, goats, sheep and bovine semen | EXEMPT | Agriculture/Livestock: Exempting live animals and bovine semen makes these inputs cheaper for farmers, encouraging investment and growth in the livestock and dairy sectors. |
| 3(24) | Poultry meat and Kapenta (small dried fish) | EXEMPT | Food Security: Exempting these basic protein sources is a pro-poor measure aimed at making affordable protein more accessible to the general population. |
3. Agricultural Machinery and Inputs (Section 4)
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Change: Amends the description for Tariff Heading 84.32 in Part II (Zero-Rated Goods).
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Impact: Agricultural Machinery for soil preparation or cultivation (e.g., plows, harrows, tillers) remains Zero-Rated. This allows farmers to import or purchase new equipment without incurring the 15% VAT, a major incentive for farm mechanization and improved productivity.
4. Basic Food and Horticulture Clarity (Sections 6 & 7)
These sections refine and expand the list of Zero-Rated goods, often in line with basic food security and specific horticultural products.
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Section 6: Repeals and substitutes the description for Other Fruit, fresh (Heading 08.10) with an expanded list specifying various berries, kiwifruit, durians, and persimmons. This provides greater clarity on which specific fresh fruits are Zero-Rated.
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Section 7: Inserts extensive commodity codes for:
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Live Animals: Bulls, Live Swine, Live Sheep and Goats.
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Meat: Poultry meat (fresh, chilled, or frozen) in various forms (cuts, offal, etc.).
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Fish: Freshwater, dried fish.
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Bovine Semen.
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Effect: The specific inclusion of commodity codes for live animals, poultry meat, and bovine semen in the Zero-Rated list reinforces the government’s commitment to reducing costs and promoting supply within the agricultural sector, especially livestock.
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5. Support for Persons with Disabilities (PWDs) (Section 8)
This is a significant social welfare component of the S.I., inserting a new paragraph (12) into Part II (Zero-Rated Goods).
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Change: Inserts a massive list of goods by commodity code.
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Impact: A wide range of assistive devices and specialized items are now Zero-Rated, making them substantially cheaper for PWDs, charities, and organizations that serve them.
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Examples: Braille publications (books, newspapers), mobility white canes, Braille computer terminals, motor vehicle parts specially adapted for disabled drivers (steering mechanisms), carriages for disabled persons, contact and refractive lenses, spectacle frames/mountings, orthopaedic appliances, and Braille watches.
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Policy Goal: This measure directly addresses the high cost of living for PWDs by removing the VAT burden on essential items necessary for mobility, communication, and correcting vision/hearing defects.
6. Effective Date (Section 9)
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Change: Confirms that the previous VAT amendment S.I. 105 of 2024 (No. 69) is deemed to be effective from 1st January 2024.
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Impact: This ensures there is no tax gap or ambiguity regarding the date of implementation for the regulations introduced earlier in the year.
🎯 Overall Summary
S.I. 140 of 2024 is a targeted fiscal instrument aimed at economic stability and social support:
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Lowering the Cost of Production: By Zero-Rating key inputs for tobacco and agricultural machinery, and Exempting fuel logistics, the government aims to reduce costs for primary producers.
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Affordable Food and Protein: Exempting poultry meat and kapenta is a direct action to lower food costs.
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Social Equity: The extensive Zero-Rating of assistive devices for PWDs is a commendable measure that enhances social inclusion and accessibility.
