Zimbabwe stockbrokers give in over VAT

As a result, trade resumed on the Zimbabwe Stock Exchange last week pending the Fiscal Appeals Court ruling on the tax dispute with revenue collec-tor the Zimbabwe Revenue Authority. But this time the appeal court is expected to rule on whether the VAT payments should be backdated to 2004 as opposed to the legality of Zimra’s demands. Zimra wants brokers to |bring their VAT accounts to date begin-ning in 2004 when sales tax was phased out. Finance Minister Dr Herbert Murerwa yesterday indicated brokers had erred in their interpretation of the law, and pending the court’s judgment they would be obliged to pay VAT. The tax would be charged on the 2 percent brokerage commission and so will inccrease the price of a parcel of shares by a mere 0,3 percent. The ZSE regularly fluctates by more than this percentage. This also means equity investors would now be subject to three taxes – stamp duty, withholding tax and |VAT. “Following discussions between Zimra and representatives of the ZSE regarding the impasse that had resulted in the stoppage of trading on the ZSE, an agreement has now been reached that stockbrokers resume trading with immediate effect and pay VAT,” said the minister. “The matter concerning the correct interpretation of the law regarding the payment of VAT by brokers will be referred to the courts.” Minister Murerwa returned from a business trip abroad on Wednesday. ZSE chief executive Mr Emmanuel Munyukwi described the latest develop-ment as “a positive move” as the stand-off was hurting investors. Brokers confirmed the VAT dispute had been taken to court, and that trade will continue pending judgment. Zimra’s demands for stockbrokers to pay VAT going back to 2004 had stirred a hornets’ nest leading brokers to boy-cott trade since May 22. This was the second time in six months that trade had come to a grind-ing halt owing to differences over tax between Zimra and stockbrokers. Last August, stockbrokers refused to function as Zimra’ tax agents with regard to newly introduced 10 percent capital gains tax. ‘ The Herald.

June 2006
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