While not a complete surprise, the Zimbabwe Revenue Authority (ZIMRA) has now intensified its efforts on implementation of the fiscalization project. In Public Notice Number 11 of 2021, the taxman announced that issuance of tax clearances for vat registered taxpayers shall be conditional on full compliance with the fiscalisation regulations contained in Statutory Instrument 104 of 2010 (Fiscalised Recording of Taxable transactions).
Previous fiscalisation initiatives were not very successful in my opinion. Instead of voluntary compliance by taxpayers, the taxation authority directed that vat registered operators be fiscalised or show their commitment to comply by purchasing the fiscal devices in order to obtain their tax clearances. This year, there is more. Vat registered taxpayers must purchase and install, interface and configure the fiscal devices to separately show transactions conducted in local currency (ZWL) and those conducted in foreign currency (USD). Tax clearances will only be given to vat registered taxpayers who have fully complied with this directive in addition to the usual submission of returns and payment of taxes.
Unlike in previous years, approved suppliers have now been mandated to deliver install and configure fiscal devices within a period of fourteen days from date of purchase. Public Notice Number 18 of 2021 made it clear that ZIMRA will not accept any commitment by the approved suppliers to the effect that the client’s fiscal devices will be installed, interfaced and configured at a future date.
To encourage compliance, tax relief measures were already availed to players in the fiscalisation space. Approved suppliers benefit from rebates on import duty, exemption of import vat and zero-rating of local supply of fiscal devices. On the other hand, vat registered operators are entitled to claim fifty percent of the cost of purchase as input tax in the determination of the value added tax payable.
Failure to comply with the directive on fiscalisation will not only prevent taxpayers from obtaining their tax clearances, but will also incur heavy penalties charged per point of sale for every day that the vat registered operator is in default.
While the taxation authority is well intentioned in its zeal to enforce fiscalisation, yours truly is convinced that the extreme measures adopted fail to fully appreciate the financial predicament of small business enterprises in the aftermath of the covid 19 pandemic and enforced national lockdowns. In my humble opinion, the exorbitant initial capital outlay required to purchase and install the fiscal devices inculcate in the minds of taxpayers the propensity to defer fiscalisation in the interim in favour of getting their businesses up and running for starters.
There you have it, statutory instrument 104 of 2010 is the revolutionary set of value added tax regulations which many believed have managed to get away with. However, the taxman reckons that there is no way out this time around.