Vat headed for the rocks

Shakeman Mugari

The newly introduced Value Added Tax (Vat) could be headed for the rocks with revelations this week that the bulk of companies have not registered, a situation likely to compromise government

‘s revenue base.


Commissioner-general of the Zim-babwe Revenue Authority (Zimra), Gershom Pasi, on Wednesday admitted that the response had been below what the tax authority had expected.


“The response at the inception of Vat has not been as successful as we would have wanted,” Pasi said. “We have only registered a few companies.”


Pasi said he had only signed 5 000 certificates for companies registered under Vat.


“A good number have not registered. They are only coming now to submit and collect forms for registration. But are moving fast.”


The Vat system implies that goods are taxed at every stage of production from the manufacturer to the end user. This is in contrast to the sales tax where the government recovers tax at the end of the production chain.

Business people who spoke to businessdigest professed ignorance as to the operations of Vat. Sources at Zimra said there was chaos at the authority as companies failed to register in time with some indicating they did not have the required software to effectively implement the new system.

Zimra tax officers have been accused of aiding and abetting tax evasion. Last month two Zimra officers were nabbed after being named in a shady tax deal. Economic commentator John Robertson said the system has started badly due to lack of enough preparation.


“There was lack of preparation and training on the part of the stakeholder,” Robertson said. “Companies do not have the software and there is certainly no proper and thorough training.”