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 15%.

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.
  • the 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

Collection of Tax on exportation

  • With effect from 1st August 2010, the definition of “unbeneficiated chrome” was broadened to include chrome ore, chrome fines as well as semi-processed chrome concentrates. Un-beneficiated chrome means chrome ore and fines which have not been subjected to the following processes:--

-crushing, milling and washing to remove the waste material; an

-the smelting of the resulting chrome concentrate into pellet or ingot form.

Where chrome concentrate has undergone a smelting process which results into pellets and ingot, the chrome concentrate shall be considered to have been beneficiated and will not be liable to the 20% export tax. The rate of export tax on ‘’unbeneficiated chrome’’ has also been increased from 15% to 20%.

The export tax is a prohibited deduction so it cannot be claimed as input tax.

 
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