VAT Treatment-Supply of Goods and Services.
In terms of the Value Added Tax (VAT) Act [Chapter 23:12]. VAT is levied on the supply of goods and services as well as on the importation and exportation of
goods and/or services.
Taxable supplies attract VAT at specified rates of 0%and 15% or any other rate as
may be specified by the Minister responsible for Finance.
Standard rated supplies
These are supplies of goods and services that are taxable at the rate of 14.5%.Goods generally standard rated, unless they are zero rated, or exempt.
Zero rated supplies.
Zero rated supplies are taxed at the rate of 0%. Zero rating is a way of ensuring that goods are provided free of VAT. A registered operator who supplies zero rated
goods or services is allowed to claim input tax credit in relation to that supply. Such an operator must obtain and retain documentary proof of his entitlement to
apply the zero rates.
Zero rated supplies are specified in the VAT Regulations and include:-
- Basic foodstuffs such as mealie-meal, sugar, milk, meat, salt, bread, etc.
- Agricultural inputs such as fertilizer, seeds, and pesticides, animal feed,animal remedy, plants, tractors, etc.
- Exported goods with the exception of un-beneficiated chrome
- The supply of day old chicks weighing not more than 185g is zero-rated with effect from 1st September 2010.
- Supply of domestic electricity
- Live bovine animals, live swine, sheep and goats
- Sugar cane
Exempt supplies.
Exempt supplies are supplies of goods and services on which no VAT is chargeable at all. VAT incurred on goods and services acquired to make exempt
supplies shall not be claimed as input tax credit. Traders who exclusively provide exempt supplies are not required to register for VAT purposes. Exempt supplies include the following services and products:
- Medical services.
- Educational services
- Rentals from residential properties
- Transport of fare-paying passengers
- Water for domestic use
- Fuel
