Value Added Tax (VAT) in Zimbabwe is a consumption tax administered by the Zimbabwe Revenue Authority (ZIMRA). VAT applies to the sale of most goods and services, and whether a business must register depends on the VAT registration threshold.
As of 2025, the compulsory VAT registration threshold in Zimbabwe is USD 25,000 (or ZWL equivalent) in taxable supplies over any rolling 12-month period. Any business whose taxable turnover meets or is expected to meet this threshold must register for VAT with ZIMRA.
Businesses below this threshold may still choose to register voluntarily to claim input VAT or improve credibility with customers and government entities.
What Counts as Taxable Supplies?
Taxable supplies include most goods and services subject to VAT. Exempt supplies, such as certain financial services, residential property sales, and educational services, are not included in the threshold calculation.
Examples of taxable supplies include:
- Sale of retail goods
- Professional services such as consultancy, accounting, or legal services
- Manufacturing or production of goods for sale
- Hospitality and accommodation services
Businesses whose activities are mostly exempt may not reach the threshold, but voluntary registration remains an option.
Who Must Register?
You are required to register for VAT if:
- Your taxable turnover exceeds USD 25,000 within any 12-month period.
- You expect your taxable supplies to exceed this threshold in the near future.
- ZIMRA instructs your business to register based on trading activity.
Failure to register when required can result in fines, backdated VAT obligations, and potential legal action.
Voluntary VAT Registration
Businesses below the threshold may opt for voluntary registration. Benefits include:
- Ability to claim input VAT credits on purchases.
- Improved business credibility with clients and suppliers.
- Preparation for future growth that may push taxable turnover above the threshold.
Voluntary registration requires compliance with the same VAT filing and payment rules as compulsory registration.
Determining If the Threshold Applies to Your Business
- Calculate Your Turnover: Add the value of all taxable supplies (excluding VAT) over the past 12 months.
- Project Future Sales: If your business is approaching USD 25,000 in taxable sales, proactive registration is required.
- Exclude Exempt Supplies: Only taxable supplies count toward the threshold.
- Monitor Monthly: Keep track of your sales regularly to avoid late registration.
When to Register
- Compulsory registration: Submit your VAT application once your taxable turnover reaches the threshold. The effective registration date is usually the first day of the month following the threshold breach.
- Voluntary registration: You may choose the registration date, ideally aligned with the start of a tax period.
Consequences of Missing the Threshold
Failing to register for VAT on time can lead to:
- Fines and penalties from ZIMRA
- Backdated VAT liabilities
- Ineligibility to claim input VAT
- Disqualification from government tenders or contracts requiring a Tax Clearance Certificate (TCC)
Timely registration ensures compliance and avoids unnecessary financial or legal consequences.
Tips for Compliance
- Maintain accurate sales and revenue records.
- Monitor your turnover against the threshold monthly.
- Clearly separate taxable and exempt supplies in your accounting records.
- Register promptly when you reach or expect to exceed the threshold.
- Consider voluntary registration if your business is growing rapidly.
Conclusion
The VAT registration threshold in Zimbabwe is USD 25,000 in taxable supplies over 12 months. Businesses exceeding this threshold must register for VAT with ZIMRA, while those below it can register voluntarily.
By tracking turnover, understanding which supplies count as taxable, and registering on time, businesses can ensure compliance, avoid penalties, and maintain credibility in the Zimbabwean market. Timely VAT registration is a key step in running a professional and growth-oriented business in Zimbabwe.
