THE High Court yesterday reserved judgement indefinitely in a dispute between stockbrokers and the Zimbabwe Revenue Authority (Zimra) over backdated value-added tax (VAT).
High Court Judge President Rita Makarau presided over the six-month d
Stockbrokers were represented by Tendai Biti of Honey & Blankenberg while Zimra was represented by Rodgers Matsikidze of Sinyoro & Company.
A total of 15 stockbroking firms are contesting the payment of VAT backdated to January 2004.
Stockbrokers filed a notice of appeal in terms of Section 33 of VAT against the decision by Zimra commissioner-general Gershem Pasi compelling them to remit backdated VAT payments.
Biti argued that the commissioner-general erred in determining that stockbrokers were liable for the collection and payment of VAT for their services.
He also argued that the commissioner-general ignored the fact that stockbrokers were exempt from the payment of VAT by virtue of the provisions of Section 11 of the Value Added Tax Chapter 23:12.
The 15 stockbrokers represented by Biti are Intermarket Stockbrokers, FBC Securities (Pvt) Ltd, EFE Securities, Sagit Stockbrokers, Imara Edwards Security, Renaissance Securities P/L Fidelity Securities P/L, M Lynton-Edwards Stockbrokers, Remo Investments Brokers P/L, Interfin Securities P/L, Kingdom Stockbrokers P/L, Mast Stockbrokers, ABC Stockbrokers P/L, New Africa Securities P/L and D Vrettos Stockbrokers.
Matsikidze, arguing for Zimra, said that stockbrokers were liable to pay VAT as they fall under the financial services sector which is compelled to pay the tax in terms of the VAT Act.
Stockbrokers have warned that VAT payments backdated to 2004 could lead to a spate of company closures and loss of confidence in the local bourse, while Zimra is arguing that laws should not be applied selectively.
The stock market, which has some of the highest transaction costs in the world, could have lost an estimated $500 million in un-traded shares after the local bourse failed to buy and sell shares for six days in June over the dispute.