Vatrates

Every supply a Zimbabwean registered operator makes falls into one of three boxes, and which box it lands in decides everything about the VAT consequences: how much tax is charged, whether the operator can recover the input tax on related costs, and what paperwork must be kept. The three boxes are standard-rated supplies, zero-rated supplies (Section 10), and exempt supplies (Section 11). This lesson teaches how to place any supply in the correct box and why the boxes behave so differently. It builds directly on Zimbabwe VAT Foundations (Zimbabwe VAT Foundations and Conceptual Fram…), which introduced the charging provision and the supply concept, and feeds forward into Input Tax, Time of Supply, and the Practical VAT lessons.

The governing law is the Value Added Tax Act [Chapter 23:12]. The charge itself is in Section 6(1), which levies "a tax at such rate as may be fixed by the Charging Act" on (a) supplies of goods or services by a registered operator in the course or furtherance of trade, (b) the importation of goods, (c) the supply of imported services, and (d) goods sold through an auctioneer by non-registered persons. The word "Charging Act" is decisive: the VAT Act does not fix the rate — the annual Finance Act [Chapter 23:04] does. That is why the standard rate is a moving number, and it has just moved: the standard rate is 15.5% with effect from 1 January 2026 (up from 15%), under the Finance Act 2025 (Act No. 7/2025), as confirmed by ZIMRA Public Notice on the 2026 rate change. The corresponding VAT (tax) fraction for extracting tax from a VAT-inclusive price is therefore 15.5/115.5 from 1 January 2026 (it was 15/115 before).

A standard-rated supply is the default: any taxable supply that is not zero-rated or exempt is charged at 15.5%, and the operator may deduct the input tax on costs incurred to make it. A zero-rated supply under Section 10 is still a taxable supply — it is simply taxed at a rate of 0%. The vital consequence is that the operator charges no output tax but retains full input-tax recovery on its costs. Zero-rating is reserved mainly for exports and export-related goods and services — exported movable goods (Section 10(1)(a)), international transport (Section 10(2)(a)), going-concern transfers between registered operators (Section 10(1)(e)), the supply of gold to the Reserve Bank or registered banks (Section 10(1)(f)), prescribed basic goods and services (Section 10(1)(g)/(2)), and certain tourism services to non-residents (Section 10(2)(q)). An exempt supply under Section 11 is outside the tax altogether: no output tax is charged and no input tax may be recovered on the costs of making it. Exemptions cover financial services (Section 11(a)), residential accommodation in a dwelling (Section 11(c)), passenger road and rail transport (Section 11(f)), education (Section 11(g)), medical services (Section 11(h)), donated goods supplied by associations not for gain (Section 11(b)), employee-organisation membership supplies (Section 11(i)), and goods/services prescribed by regulation (Section 11(j)).

The economic and exam-critical distinction is between zero-rated and exempt. To a casual observer both mean "no VAT on the sale", but they are opposites in their effect on input tax. Zero-rating is favourable — full recovery, often a refund position. Exemption is unfavourable to the supplier — the input tax becomes a trapped cost embedded in prices. A taxpayer who treats an exempt supply as zero-rated, or vice versa, mis-states both output tax and input-tax recovery, and (because Section 37 puts the burden of proof on the person claiming the favourable rate) will lose on audit unless they hold the documentary proof that Section 10(3) demands. This lesson works through each category clause by clause, with worked computations at 15.5%, the case law that polices the boundaries, and the pitfalls ZIMRA audits target.

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VAT is a tax on consumption, collected in instalments along the production-and-distribution chain. As we established in Zimbabwe VAT Foundations and Conceptual Fram…, a registered operator acts as an unpaid collector for the State: it charges output tax on what it sells and deducts input tax on what it buys, remitting only the net to ZIMRA. The genius of the system is that, by the time goods reach the final consumer — who cannot deduct anything — the full tax has been collected, but each business in the chain has only borne the tax on the value it added.

That elegant machinery only works if every supply is correctly classified, because the rules of the game change completely depending on the classification. There are exactly three classes of supply in Zimbabwean VAT, and a fourth concept (the "out-of-scope" or non-supply) sitting just outside them:

1. Standard-rated supplies — taxed at the standard rate (15.5% from 1 January 2026). Output tax is charged; input tax on related costs is recoverable. This is the default.
2. Zero-rated supplies (Section 10) — taxable supplies taxed at 0%. No output tax is charged, but input tax on related costs is fully recoverable.
3. Exempt supplies (Section 11) — supplies outside the tax. No output tax is charged, and input tax on related costs is not recoverable.

Define the foundational terms before going further: - A taxable supply is a supply that is charged with tax under Section 6 — it includes both standard-rated and zero-rated supplies. This is a point students constantly miss: zero-rated supplies are taxable supplies; only their rate is zero. - An exempt supply is, by the Section 2 definition, "a supply that is exempt from tax under section eleven." It is not a taxable supply. - The standard rate is the rate fixed by the Charging Act (Finance Act) for supplies that are neither zero-rated nor exempt. - The rate of zero per centum (0%) is the rate the Act itself applies to the listed section-10 supplies.

Why does classification matter so much? Because it determines three things at once: - Output tax: 15.5%, 0%, or none. - Input-tax recovery: full (standard and zero-rated), or denied (exempt). For a business making both taxable and exempt supplies ("mixed" or "partial" supplies), input tax must be apportioned — the subject of Input Tax Deep Dive (Capital Goods & Pre-Reg). - Compliance and documentation: zero-rating requires the operator to obtain and retain documentary proof under Section 10(3); getting the category wrong triggers reassessment, additional tax, and penalties.

This lesson is examinable in almost every VAT paper and is a constant ZIMRA audit battleground, especially around the zero-rated vs exempt line and around export zero-rating, where the documentary-proof requirement is strict.

Section 6 — the charge and the source of the rate

Section 6(1) is the charging provision: "there shall be charged, levied and collected, for the benefit of the Consolidated Revenue Fund a tax at such rate as may be fixed by the Charging Act on the value of—": - (a) the supply by any registered operator of goods or services "in the course or furtherance of any trade carried on by him" (with a proviso excluding second-hand motor vehicles subject to special excise duty under Section 172B of the Customs and Excise Act, inserted by Act 6 of 2006); - (b) the importation of any goods into Zimbabwe by any person; - (c) the supply of any imported services by any person; and - (d) goods and services sold through an auctioneer by persons who are not registered operators (a paragraph with a complex history: repealed by Act 8 of 2005, re-inserted by Act 16 of 2007 w.e.f. 4 January 2008).

Section 6(2) allocates who pays: the registered operator for para (a) supplies, the importer for para (b), the recipient of imported services for para (c), and the auctioneer for para (d).

The single most important phrase for this lesson is "at such rate as may be fixed by the Charging Act." The "Charging Act" is the Finance Act [Chapter 23:04] (Section 2 definition: the enactment by which rates of tax are fixed). The VAT Act therefore deliberately does not state the standard rate — it points to the Finance Act, which can move the rate annually. This is the same two-statute design we met in Introduction to Taxation in Zimbabwe: a permanent structural Act plus an annual rate-setting Act.

Old vs new law — the rate change. Prior to 1 January 2026 the standard rate was 15% (VAT fraction 15/115). The Finance Act 2025 (Act No. 7/2025) increased it to 15.5% (VAT fraction 15.5/115.5) with effect from 1 January 2026, as set out in ZIMRA's VAT rate-change public notice. The notice also explains a category-straddle problem: Category C, B and D operators are fixed at 15.5%, but Category A operators whose December 2025 period was taxed at 15% and January 2026 period at 15.5% must make a manual back-calculation on the combined return due 10 February 2026. (Historically the rate has also been 15% for long periods, and was briefly 14.5% in earlier years — always confirm the rate for the year of assessment from the Finance Act/notice.)

Section 81 — notice of variation of rate of tax. The Act anticipates rate changes: Section 81 lets the Minister, where a taxation proposal to increase or decrease the rate has been tabled in Parliament, give notice so that the new rate operates provisionally until the Act of Parliament is passed. This is the mechanism through which a budget-day rate change can take immediate effect.

Section 10 — zero rating

Section 10 opens: "Where, but for this section, a supply of goods would be charged with tax at the rate referred to in subsection (1) of section six, such supply ... shall, subject to compliance with subsection (3), be charged with tax at the rate of zero %" if it falls within one of the listed paragraphs. Note the structure: zero-rating is an override of the standard rate, available only for listed supplies and only if the documentary-proof condition in Section 10(3) is met.

Section 10(1) — zero-rated goods include: - (a) movable goods exported under a sale or instalment-credit agreement; - (b) goods supplied in repairing/renovating/modifying/treating goods referred to in Section 10(2)(g)(ii) or (iv) where the goods are wrought into or become part of those other goods, or consumables consumed in the process; - (c) goods supplied under a rental/charter agreement used exclusively in an export country; - (d) goods supplied under a rental/charter agreement used by the lessee exclusively in a commercial/industrial/mining/farming/professional concern in an export country, paid for from that export country; - (e) the supply of a trade (or part of a trade) as a going concern to a registered operator, where both parties agree in writing that it is disposed of as a going concern and will be an income-earning activity on transfer, and the necessary assets are transferred; - (f) the supply of gold (bars, blank coins, ingots, etc., refined only) to the Reserve Bank or a registered bank; - (g) goods or services prescribed in regulations under Section 78 (the gateway for basic foodstuffs and other prescribed zero-rated items in SI 273/2003); - (h) goods supplied by an operator to its branch/main business in an export country (Section 7(8)); - (i) gold coins issued by the Reserve Bank in circulation; - (j) medicines or allied substances within the Medicines and Allied Substances Control Act [Chapter 15:03] prescribed for this purpose (substituted by Act 29 of 2004 w.e.f. 1 January 2005).

A crucial proviso to Section 10(1) prevents abuse: paragraphs (a)–(d) do not apply where input tax under para (b) of the "input tax" definition (the notional/second-hand input deduction) has already been deducted by that operator or a connected person.

Section 10(2) — zero-rated services include, among others: - (a) international transport of passengers or goods (Zimbabwe ↔ export country, or export country ↔ export country); - (b) domestic passenger transport by aircraft constituting "international carriage"; - (c) ancillary transport of goods supplied with para (a) services; - (e) transport/ancillary services connected with import/export or transit of goods, supplied to a non-resident non-operator; - (f) services connected with land or improvements situated in an export country; - (g) services in respect of movable property in an export country, temporarily-imported goods, or repair/maintenance of a foreign-going aircraft; - (h) handling, pilotage, salvage, towage and operation/management of foreign-going aircraft; - (i) arranging exports or the above services for a non-resident non-operator; - (k) services physically rendered outside Zimbabwe (not telecommunications) used in Zimbabwe; - (l) services supplied contractually to a non-resident who is outside Zimbabwe when the services are rendered (note: the G (Pvt) Ltd v ZIMRA 22-HH-011 requirements are cumulative — all conditions must be met), excluding services connected with Zimbabwean land or movable property; - (m) intellectual-property services for use outside Zimbabwe; - (n)/(p) certain private voluntary organisation and transfer-payment services deemed supplied to a public authority; - (q) certain tourism services to non-residents (designated tourist facilities, "boarding house"/"back-packers' lodge" accommodation for non-residents, hunting safaris) — a paragraph validated retrospectively by Finance Act (No. 3) 11 of 2014.

Section 10(3) — the documentary-proof condition. "Where a rate of zero % has been applied ... the registered operator shall obtain and retain such documentary proof substantiating ... entitlement to apply the said rate ... as is acceptable to the Commissioner." This is the operative compliance rule: no acceptable proof, no zero-rating. The courts apply it strictly (VSL (Pvt) Ltd 19-HH-023 para 238; E.J (Pvt) Ltd 19-HH-528).

Section 11 — exempt supplies

Section 11 lists supplies that "shall be exempt from the tax imposed in terms of paragraph (a) of subsection (1) of section six": - (a) financial services — but excluding short-term insurance by agents/brokers liable to property-and-insurance commission tax under Section 36H of the Income Tax Act (deemed a financial service of the agent/broker; tax payable on the commission, not the policy value — substituted by Finance (No. 2) Act 9 of 2015 w.e.f. 1 January 2016), and excluding financial services that would otherwise be zero-rated under Section 10; - (b) supply by an association not for gain of donated goods/services, or goods at least 80% of whose materials are donated; - (c) accommodation in a dwelling under a letting agreement, or employer-provided accommodation occupied as a benefit of office/employment; - (d) leasehold land let for the principal purpose of dwelling accommodation; - (e) supply of land and existing improvements situated outside Zimbabwe; - (f) fare-paying passenger transport by road or rail (not transport already zero-rated under Section 10(2)(a)); - (g) educational or training services (pre-school, primary, secondary, university, technical) at institutions registered under the education Ministries — with carve-outs for sporting facilities, accommodation, and hostel/canteen services to non-students; - (h) medical services by any person or institution; - (i) supplies by an employee organisation to members where the consideration is membership contributions; - (j) goods/services prescribed in regulations under Section 78 (see Part 1 of the First Schedule to SI 273/2003; Zimudzi v ZIMRA 21-HH-713; GTO Association 19-HH-464).

Note the boundary devices: Section 11 repeatedly says "not being a supply which ... would be charged ... at zero %" — i.e. where both could apply, zero-rating takes priority over exemption. This is deliberate, because zero-rating is more favourable to the supplier.

The default — standard rating at 15.5%

If a supply is (i) made by a registered operator, (ii) in the course or furtherance of trade, and (iii) not listed in Section 10 or Section 11, it is standard-rated. The operator must charge output tax at 15.5% on the value of supply (determined under Section 9 — see Value of Supply and Valuation Rules), issue a tax invoice, and may deduct input tax on costs incurred to make that supply.

Two computational directions matter: - Tax-exclusive (adding VAT on top of a net price): VAT = price × 15.5%. Example: net price USD 1,000 → VAT USD 155.00 → VAT-inclusive USD 1,155.00. - Tax-inclusive (extracting VAT from a gross price): VAT = gross × VAT fraction = 15.5/115.5. Example: gross USD 1,155.00 → VAT = 1,155.00 × 15.5/115.5 = USD 155.00 → net USD 1,000.00.

The VAT fraction 15.5/115.5 is the single most-used computational tool in Zimbabwean VAT from 1 January 2026; commit it to memory and recompute it whenever the rate changes (it was 15/115 until 31 December 2025).

Zero-rating — taxable at 0%, full input recovery

A zero-rated supply is still a taxable supply; the rate is merely 0%. The operator: - charges 0% output tax (so collects nothing from the customer), but - retains full input-tax recovery on the costs of making that supply.

The result is structurally a refund position: input tax exceeds output tax, so ZIMRA owes the operator money (linking to VAT Refunds and Exporter Refunds). This is the policy point of zero-rating — to ensure that exports leave Zimbabwe free of any embedded VAT (the "destination principle": goods are taxed where consumed, not where produced), keeping Zimbabwean exporters competitive, and to relieve basic necessities of tax in full.

The price of zero-rating is proof. Under Section 10(3), the operator must hold documentary evidence "acceptable to the Commissioner" — for exports, that means export documentation (bills of entry, CD1 forms, transport documents, proof the goods left Zimbabwe). Without it, ZIMRA will reassess the supply as standard-rated at 15.5% and add penalties.

Exemption — outside the tax, input tax trapped

An exempt supply is not taxable at all. The operator: - charges no output tax, and - cannot recover input tax on the costs of making the exempt supply.

The denied input tax becomes a cost to the supplier, which it must absorb or build into its prices. This is why exemption, although it sounds like a benefit, is often worse for the supplier than zero-rating — and sometimes worse than standard rating, because the supplier cannot pass the tax forward as a recoverable charge. Exemption is targeted at sectors where taxing the output would be administratively hard or socially undesirable: financial services (hard to value the margin transaction-by-transaction), residential rent, education, medical services, and public passenger transport (social-policy reliefs).

Mixed (partial) suppliers and apportionment

A business making both taxable (standard/zero) and exempt supplies — for example, a bank with a taxable advisory arm, or a school with a taxable uniform shop — cannot recover all its input tax. It must apportion input tax between taxable and exempt activities and recover only the taxable portion (Section 16; Input Tax Deep Dive (Capital Goods & Pre-Reg) and the VAT apportionment calculator). Misclassifying a supply therefore distorts not just output tax but the whole apportionment ratio.

A clean decision framework

To classify any supply, ask, in order: 1. Is it a supply made by a registered operator in the course or furtherance of trade (Section 6)? If no → out of scope. 2. Is it listed in Section 11 as exempt? If yes — and it is not also zero-rated — → exempt (no output tax, no input recovery). 3. Is it listed in Section 10 as zero-rated, and can you hold Section 10(3) proof? If yes → zero-rated (0% output, full input recovery). 4. Otherwise → standard-rated at 15.5% (output tax, full input recovery).

Remember the priority rule: where a supply could be both zero-rated and exempt, zero-rating prevails (the Section 11 carve-outs say so expressly).

Individual / sole trader

Scenario. Rumbi is a registered sole trader who (i) sells hardware locally and (ii) lets a residential cottage she owns. - Hardware sales are standard-rated. On monthly sales of USD 20,000 (tax-exclusive): output tax = 20,000 × 15.5% = USD 3,100. - Residential letting is exempt under Section 11(c). On rent of USD 800/month: no output tax, and she cannot recover the VAT on cottage maintenance.

If Rumbi spends USD 1,000 (net) on cottage repairs, the USD 155 VAT on it is irrecoverable (exempt activity). The VAT on hardware-shop costs is recoverable. Rumbi is a mixed supplier and must apportion any shared overheads (Section 16). Lesson: the residential rent looks "VAT-free" but actually traps input tax.

SME / partnership — the export exporter

Scenario. Veld Produce, a partnership, grows and exports mangetout to the EU and also sells some locally. - Exports of the movable goods are zero-rated under Section 10(1)(a) — 0% output tax, but full input-tax recovery on fertiliser, packaging, cold-chain and transport. - Local sales are standard-rated at 15.5%.

Monthly figures: exports USD 100,000 (0% → output USD 0); local sales USD 40,000 (output USD 6,200); total input tax on all farm costs USD 9,000. - Output tax: USD 6,200 - Input tax: USD 9,000 (fully recoverable — all activities are taxable, standard or zero) - Net VAT position: USD 6,200 − 9,000 = (USD 2,800) refundable

Veld Produce is in a refund position precisely because exports are zero-rated. But the zero-rating stands only if the partnership holds Section 10(3) export proof for the USD 100,000. If it cannot, ZIMRA reassesses those sales at 15.5% (output +USD 15,500), flipping the refund into a large liability. Lesson: zero-rating + documentation discipline = competitive exports; missing documents = disaster.

Large corporate / multinational — the bank (exempt financial services)

Scenario. Apex Bank earns interest and fee income from financial services (exempt under Section 11(a)) and also runs a taxable advisory and asset-management arm. - Financial services: exempt — no output tax, and input tax on the costs of that arm is irrecoverable. - Advisory/asset management: standard-rated at 15.5% — output tax charged, related input tax recoverable. - Short-term insurance via brokers is carved out of the exemption by Section 11(a)(i): tax is payable on the broker's commission, treated as a financial service of the broker, with the link to commission tax under Section 36H of the Income Tax Act.

Apex must run a careful apportionment of shared input tax (head-office IT, premises, audit) between exempt and taxable arms, recovering only the taxable share. A 1% error in the apportionment ratio on a large overhead base is a material VAT exposure. Lesson: for financial institutions, exemption is the defining VAT problem — it traps input tax and forces precise apportionment; the Ice Class Properties v NMB Bank and ZIMRA 19-HH-028 "bancassurance" dispute shows how live the financial-services boundary is.

The source VAT Act annotates these authorities (used here as they appear in the Act):

• Delta Beverages (Pvt) Ltd v ZIMRA 23-HH-577 — annotated at Section 6(1): the charge is to "just 'a tax'", reinforcing that Section 6 imposes the VAT and the rate comes from the Charging Act, not Section 6 itself.
• E.J (Pvt) Ltd v ZIMRA 19-HH-528 — annotated at Section 6(1), Section 10(1)(e) and Section 10(3): a business trading in renting and disposing of properties was carrying on a trade; relevant to the going-concern zero-rating and to the documentary-proof requirement.
• MMI (Pvt) Ltd v Commissioner-General ZIMRA 19-HH-700 — annotated at Section 6 and Section 10(1)(e): supplies of rights to mining claims/sites; going-concern issues.
• VSL (Pvt) Ltd & 3 ors v ZIMRA 19-HH-023 — annotated at Section 10(2)(q) and Section 10(3) (para 238): tourism services zero-rating and the strict need to retain acceptable documentary proof to sustain the zero rate.
• G (Pvt) Ltd v ZIMRA 22-HH-011 — annotated at Section 10(2)(l): the conditions for zero-rating services to a non-resident outside Zimbabwe are cumulative — every requirement must be satisfied.
• GTO Association v Commissioner-General of ZIMRA 19-HH-464 — annotated at Section 6(1) and Section 11(j): the trade and exempt-supply boundaries for an association.
• Ice Class Properties (Pvt) Ltd v NMB Bank and ZIMRA 19-HH-028 — annotated at Section 11(a): bancassurance/financial-services exemption boundary; courts will not declare lawful conduct unlawful.
• Zimudzi E v ZIMRA, Minister of Finance & AG 21-HH-713 — annotated at Section 11(j): prescribed exempt supplies under the First Schedule to SI 273/2003.
• Travel agents T (Pvt) Ltd v ZIMRA 15-HH-285 and A.T. International Ltd v ZIMRA 15-HH-823 — annotated at Section 6 and Section 10(2)(a): transport/travel supplies and international-transport zero-rating.
• S.T (Pvt) Ltd v ZIMRA 16-HH-696 and AMD Services (Pvt) Ltd v ZIMRA 20-HH-344 — annotated at Section 6(1)(b): goods from Export Processing Zones disposed of in Zimbabwe; importation charge.

No annotated Zimbabwean case is recorded in the source Act squarely defining the standard rate itself (that lives in the Finance Act), so the rate is taken from the Finance Act 2025 / ZIMRA public notice, not from case law.

1. Confusing zero-rated with exempt. Both mean "no VAT on the sale", but zero-rating allows full input recovery while exemption denies it. Treating an exempt supply as zero-rated over-claims input tax; treating a zero-rated supply as exempt forfeits recoverable input tax. Correct approach: always ask the input-tax question, not just the output-tax question.

2. Zero-rating an export without Section 10(3) proof. The zero rate is conditional on documentary proof acceptable to the Commissioner (VSL 19-HH-023; E.J 19-HH-528). Correct approach: keep bills of entry, CD1s, and transport/export evidence for every zero-rated export.

3. Using the wrong VAT fraction after the rate change. From 1 January 2026 the fraction is 15.5/115.5, not 15/115. Extracting VAT from inclusive prices with the old fraction under- or over-states the tax. Correct approach: update systems and the Category-A straddle return as ZIMRA's notice directs.

4. Assuming residential rent or medical/education income is "good news". These are exempt (Section 11(c)/(h)/(g)) — input tax on their costs is trapped. Correct approach: budget for irrecoverable input tax and apportion shared overheads.

5. Ignoring the zero-rate-beats-exemption priority. Where a supply could be both, zero-rating prevails (the Section 11 carve-outs say so). Correct approach: test Section 10 before settling on Section 11.

6. Forgetting the cumulative conditions for exported services (Section 10(2)(l)). All conditions must be met (G (Pvt) Ltd 22-HH-011); satisfying most is not enough. Correct approach: check each statutory condition individually.

7. Mishandling going-concern transfers (Section 10(1)(e)). The parties must agree in writing that the trade is sold as a going concern and an income-earning activity, and transfer the necessary assets. Correct approach: paper the going-concern conditions before invoicing at 0%.

8. Treating zero-rated supplies as "non-taxable". They are taxable supplies — they count toward the registration threshold and require returns and tax invoices. Correct approach: include zero-rated turnover in taxable-supply calculations.

Work through the questions one at a time. Choose an answer and it is graded immediately, with an explanation and the provision it comes from. Your progress is saved, so you can stop and resume.

• Every supply is standard-rated (15.5%), zero-rated (Section 10, 0%), or exempt (Section 11) — and the classification drives output tax, input-tax recovery, and documentation.
• The charge is in Section 6(1); the rate is set by the Charging Act (Finance Act), not the VAT Act. The standard rate is 15.5% from 1 January 2026 (was 15%), VAT fraction 15.5/115.5, under the Finance Act 2025 (Act No. 7/2025).
• Zero-rated supplies are taxable supplies at 0%: no output tax, full input recovery — typically a refund position. Reserved mainly for exports and export-related goods/services, going-concern transfers, gold to banks, prescribed basics, and certain non-resident tourism services.
• Exempt supplies are outside the tax: no output tax, no input recovery — input tax is trapped. Covers financial services, residential accommodation, passenger road/rail transport, education, medical services, and prescribed items.
• Zero-rating is conditional on documentary proof under Section 10(3) "acceptable to the Commissioner" (VSL 19-HH-023); fail the proof and ZIMRA reassesses at 15.5%.
• Where a supply could be both zero-rated and exempt, zero-rating prevails; conditions for exported services are cumulative (G (Pvt) Ltd 22-HH-011).
• Mixed suppliers must apportion input tax (Section 16); the burden of proof of any favourable rate is on the taxpayer (Section 37).
• Big-picture insight: the three-box system implements the destination principle (export VAT-free) and targeted social reliefs (basics, health, education, housing, public transport), while financing the fiscus from broad standard-rated consumption. The defining practitioner skill is keeping the zero-rated/exempt line straight — because that line, not the headline rate, decides who really bears the VAT.

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Table 1 — The three boxes compared

Feature	Standard-rated	Zero-rated (Section 10)	Exempt (Section 11)
Is it a taxable supply?	Yes	Yes (rate 0%)	No
Output tax rate	15.5% (from 1 Jan 2026)	0%	None
Input-tax recovery on related costs	Full	Full	None (trapped)
Typical net VAT position	Pay over	Refund	n/a (cost embedded)
Counts toward registration threshold	Yes	Yes	No
Tax invoice required	Yes	Yes	No (use other documents)
Key condition	Value of supply (Section 9)	Section 10(3) documentary proof	Falls within Section 11 list
Examples	Hardware, advisory, most goods/services	Exports, int'l transport, going concern, gold to banks, basics	Financial services, rent, education, medical, public transport

Table 2 — Rate history and VAT fraction

Period	Standard rate	VAT fraction	Source
To 31 Dec 2025	15%	15/115	Prior Finance Acts
From 1 Jan 2026	15.5%	15.5/115.5	Finance Act 2025 (Act 7/2025) / ZIMRA notice

Diagram — classifying any supply

flowchart TD
 A[A supply is made] --> B{Registered operator in course/furtherance of trade? Section 6}
 B -->|No| C[Out of scope - no VAT]
 B -->|Yes| D{Listed as exempt in Section 11?}
 D -->|Yes and not also zero-rated| E[EXEMPT - no output tax, no input recovery]
 D -->|No or also zero-rated| F{Listed as zero-rated in Section 10?}
 F -->|Yes| G{Hold Section 10 3 documentary proof?}
 G -->|No| H[Reassessed STANDARD 15.5%]
 G -->|Yes| I[ZERO-RATED 0% - full input recovery]
 F -->|No| J[STANDARD-RATED 15.5% - full input recovery]

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Statutes & sections

• Value Added Tax Act [Chapter 23:12] — Section 6 (charge; rate "fixed by the Charging Act"; Section 6(1)(a)–(d) supplies/imports/imported services/auctioneer; Section 6(2) who pays); Section 10 (zero rating — Section 10(1) goods incl. (a) exports, (e) going concern, (f) gold to banks, (g) prescribed; Section 10(2) services incl. (a) international transport, (l) services to non-residents, (q) tourism; Section 10(3) documentary-proof condition); Section 11 (exempt supplies — (a) financial services, (b) donated goods, (c) dwelling accommodation, (f) passenger road/rail transport, (g) education, (h) medical, (i) employee-organisation, (j) prescribed); Section 81 (notice of variation of rate of tax). Section 2 definitions: "taxable supply", "exempt supply", "Charging Act".
• Finance Act [Chapter 23:04] / Finance Act 2025 (Act No. 7/2025) — fixes the standard rate; increased it to 15.5% w.e.f. 1 January 2026 (was 15%).
• VAT (General) Regulations SI 273/2003 — First Schedule (prescribed zero-rated/exempt goods and services under Sections 10(1)(g) and 11(j)).
• Cross-references: Customs and Excise Act [Chapter 23:02] (importation, EPZ, Section 172B second-hand vehicles); Income Tax Act [Chapter 23:06] Section 36H (insurance commission tax); Medicines and Allied Substances Control Act [Chapter 15:03].

Case law (annotated in the source VAT Act)

• Delta Beverages (Pvt) Ltd v ZIMRA 23-HH-577 — Section 6 imposes "a tax"; rate from the Charging Act.
• VSL (Pvt) Ltd & 3 ors v ZIMRA 19-HH-023 — Section 10(2)(q)/Section 10(3); strict documentary-proof requirement for zero-rating.
• E.J (Pvt) Ltd v ZIMRA 19-HH-528 — trade; going-concern zero-rating; Section 10(3) proof.
• MMI (Pvt) Ltd v Commissioner-General ZIMRA 19-HH-700 — going-concern/mining-rights supplies.
• G (Pvt) Ltd v ZIMRA 22-HH-011 — Section 10(2)(l) conditions for zero-rating services to non-residents are cumulative.
• Ice Class Properties (Pvt) Ltd v NMB Bank and ZIMRA 19-HH-028 — Section 11(a) financial-services/bancassurance boundary.
• Zimudzi E v ZIMRA, Minister of Finance & AG 21-HH-713 — Section 11(j) prescribed exempt supplies (SI 273/2003 First Schedule).
• Travel agents T (Pvt) Ltd v ZIMRA 15-HH-285; A.T. International Ltd v ZIMRA 15-HH-823 — international transport/travel supplies.
• S.T (Pvt) Ltd v ZIMRA 16-HH-696; AMD Services (Pvt) Ltd v ZIMRA 20-HH-344 — importation charge; EPZ goods.
• GTO Association v Commissioner-General of ZIMRA 19-HH-464 — trade and exempt-supply boundary.

ZIMRA guidance

• ZIMRA VAT rate-change public notice — rate 15% → 15.5% w.e.f. 1 January 2026; Category-A straddle and combined return due 10 February 2026.
• ; — rate implications and return categories.
• ZIMRA Comprehensive Guide to the VAT 7 — return treatment of standard/zero/exempt supplies.