Fiscalisation is the recording of transactions for Value Added Tax purposes using electronic fiscal gadgets. The fiscalised gadgets record the information on read only memory, meaning that once recorded, this information cannot be altered.

The Minister of Finance and Economic Development made regulations in terms of Section 78 of the Value Added Tax Act to require operators to record all transactions using fiscalised devices. These regulations are cited as the Value Added Tax (Fiscalised Recording of Taxable Transactions) Regulations, 2010 and came into effect on 1 July 2010.

These regulations are being amended to provide for the fiscalisation of Categories A, B, and D VAT registered operators.

 

What are fiscalised devices?

These are electronic devices which contain a “fiscal memory”. A “fiscal memory” is a special read only memory which is permanently built into a fiscalised device to store tax information at the time of the sale.

There are three broad categories of the prescribed fiscalised devices and these are;

a) fiscalised electronic registers, also referred to as electronic tax registers (ETRs);

These devices are similar to cash registers and the major difference is that they have a fiscal memory.

b) fiscalised printers; and

Fiscal printers are small printers attached to cash registers or computers. They have a fiscal memory for recording sales at the time of printing.

c) electronic signature devices (ESDs)

These are devices the append digital signatures to transactions and they are used by registered operators who issue tax invoices.

These devices are connected to existing computers or cash registers that an operator may already have.

 

Who is supposed to fiscalise?

VAT Category C operators whose total turnover for the year exceeded US$240,000 were required to fiscalise with effect from 1 October 2011.

The Minister of Finance and Economic Development in the 2016 Mid-Term Fiscal Policy Review announced that all VAT registered operators in categories A, B and D should fiscalise their operations with effect from 1 January 2017.

Categories A and B are those registered operators who are submitting returns after every two months. They were left out during the first phase of fiscalisation in 2011 and 2012. It, therefore, means that after this phase all VAT registered operators would be fiscalised.

Category D operators submit returns on a seasonal basis, or as agreed with the Commissioner General.

 

What are the benefits of fiscalisation i.e. to clients and to ZIMRA?

Like any other automated process, fiscalisation enables a number of advantages for traders, ZIMRA and the economy.

These are:

1. Efficient recording systems for clients
2. Reduction in the cost of compliance for the client
3. Efficient collection systems for ZIMRA
4. Reduction in the cost of administration for ZIMRA
5. Efficiency in business control and management for traders and ZIMRA
6. Less paperwork for clients and ZIMRA

• Shorter audit periods for ZIMRA and thus less business stoppage for the client to accommodate auditors
• Employment and business opportunities for technicians and software houses
• More revenue for the fiscus and therefore improved national economic performance

This results in the efficient deployment of resources to other business areas for both the trader and ZIMRA and increases business efficiency. It should be noted that the project’s initial capital outlay for both ZIMRA and traders appears high while the eventual benefits more than compensate for this.

 

What has ZIMRA done since 2010 to date with regards to fiscalisation?

ZIMRA acquired servers and software to ensure that devices that are fiscalised will be sending information, real time, to ZIMRA servers. This information will be utilised for tax administration.

 

Which devices should different registered operators use?

VAT registered operators in retail business are required, for the purposes of recording their business transactions, to use:

(a)      a fiscalised electronic register; or

(b)     a non-fiscalised electronic register together with a fiscal memory device like a printer and not an electronic signature device

All other operators who are required to use such devices but who are not retail operators are required to use:

(a)   an electronic signature device; or

(b)  a fiscalised electronic register; or

(c)   a non-fiscalised electronic register together with a fiscal memory device

 

Where does one purchase the fiscalised devices?

Fiscalised devices should be acquired from the approved suppliers. Efforts are currently underway to increase the number of approved suppliers of fiscalised devices.

 

Is there any assistance Government is giving in acquiring the devices?

Incentives which are granted to facilitate the Fiscalisation Programme are as follows:

• Registered operators can claim 50% of the cost of acquisition of the fiscal electronic registers as Input Tax on their VAT 7 Return.
• Rebate of duty is granted to approved suppliers on the importation of fiscalised electronic registers and fiscal memory devices.
• No VAT is payable on the importation of fiscalised devices by approved suppliers.
• The local supply of fiscalised electronic registers and fiscal memory devices is VAT zero-rated.

 

Is there training or education provided before fiscalisation?

ZIMRA will provide taxpayer education on fiscal devices and fiscalisation to registered operators before they fiscalise. The training with cover all provisions of the law, procedures and processes to be followed once fiscalised.

The approved suppliers will also assist clients in identifying appropriate devices, install the devices as well as provide training on usage.

 

What is the procedure followed by a registered operator to be fiscalised?

Clients eligible for fiscalisation should understand the nature of their business and the appropriate gadget.

Where a client is in doubt of which gadget to purchase, he may seek the advice of an approved supplier or ZIMRA to identify the correct gadget that goes with his business.

1. Depending on the number of branches and existing set up of points of sale, clients should determine the number of each type of machine required.
2. The client should then identify the supplier of the appropriate gadget(s) required and make arrangements for the purchase thereof by ordering and paying for the gadget(s).
3. The gadgets should be programmed (by the supplier) with the description of goods and services and the correct allocation of their respective Value Added Tax rates.
4. The client should then make application in form FRT1 for the registration of the gadgets by ZIMRA. ZIMRA may require inspection of all or selected gadgets.
5. The registration must be accompanied by a detailed list of the gadgets by make, type, serial number and location (physical address).
6. ZIMRA will respond to the application within 7 days and effect the registration if the application is in order.
7. Once registered, the allocated registration numbers should be affixed to the gadgets which should then be sealed and marked with holograms by ZIMRA. Sealing and marking may be done at the client’s premises or ZIMRA premises.
8. Once the gadgets have been registered and sealed, the client should then make arrangements with the respective supplier to have the gadgets installed and tested to ensure that they are working as expected.
9. On installing of the gadgets, clients should ensure that every gadget has a backup power supply unit or where the gadget is part of a network within the client’s system, that there is a backup power capable of lasting out any power cuts for at least 8 hours.

 

What are the obligations of a person/company that is fiscalised?

A fiscalised client should:

a)      Ensure the machines are working all the time

b)     Provide power back up facilities

c)      Report faults and faulty devices

d)     Ensure faults are resolved and faulty devices are repaired timeously

e)      Generate and maintain reports on daily and monthly basis

 

What are the possible offences that clients need to guard against?

1. Failure to fiscalise (Section 10 (1) of SI 104 of 2010)

Under the current law penalties for failure to fiscalise are pegged at $25 per day up to a maximum of 180 days. To avoid these penalties clients need to fiscalise and ensure               that where they have challenges they liaise with ZIMRA.

2. Manufacture, sale or distribution of gadgets without approval (Section 10 (2) of SI 104 of 2010)

Any person who manufactures, sells or distributes fiscal gadgets without ZIMRA approval would have committed an offence - Level 7 fine

3. Failure to comply in any other respect with the requirements of the Value Added Tax Act. (Part X VAT Act – Compliance)