Did you know that in terms of section 24 of the Value Added Tax, Chapter 23:12, any registered operator who intends to cease trading, should notify the Commissioner General of the Zimbabwe Revenue Authority (ZIMRA) in writing, of his decision 21 days prior to the cessation of trade?

The Commissioner General of the Zimbabwe Revenue Authority shall cancel the registration of the respective applicant with effect from the last day of the tax period during which all such trades ceased. In winding up his business, it is likely that the trader will have unsold stock, which one way or the other, he has to dispose of. Once this stock has been properly accounted for as explained in the following paragraphs, the trader may dispose of the stock.

Treatment of stock at hand upon cessation of trade

Where the trader has stock at hand at the time he applies for cancellation, he shall be deemed to have made a supply of such stock as remains at hand as at that date. However it should be noted that if the registered operator was denied input tax deduction, then he shall not be obliged to account for VAT pertaining to the outstanding stock in question.

Reason for deeming Stock at hand supply

Stock on hand at the time of application for deregistration for VAT purposes, where the operator has claimed input tax is a deemed supply. This is so because once a deduction for input tax has been allowed for purchases, output tax must be accounted for. Failure to do so would result the operator benefiting unduly to the prejudice of the fiscus.

Time of Supply

In terms of Section 8 (5) of the VAT Act, where a registered operator’s registration is cancelled and he ceases to be a trader, the  time of supply of  any goods and services is deemed to be immediately before he ceased trading  i.e. immediately before the registration is cancelled by the Commissioner General of ZIMRA.

Value of Supply

In terms of Section 9 (8) of the VAT Act, a registered operator who ceases trading and has stock on hand shall be deemed to have supplied such stock for a consideration in money equal to the lesser of cost or open market value at that time.


Roselyn Pvt Ltd ceased trading on 25 November 2012, stock as at that date was valued at $200,000; however the total cost upon purchase was $180,000. The company shall account for output tax on $180,000 since it is the lesser of the two. Therefore output tax of $23,478.26 (15/115*180000) should be accounted for.

Cancellation of Registration

Once satisfied that the operator has fulfilled all the requirements and that all VAT has been properly accounted for, the Commissioner General of ZIMRA will cancel the registration and withdraw the VAT registration Certificate.