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An Advance Tax Ruling is a written statement issued by the Commissioner General of ZIMRA regarding the interpretation or application of any of the Acts specified in the 1st Schedule of the Revenue Authority Act which include the Income Tax Act the Capital Gains Tax Act the Customs and Excise Act and the Value Added Tax ActTypes of Advance Tax Ruling

1. Binding General Ruling – This is an Advance Tax Ruling that affects all taxpayers. The Commissioner General of ZIMRA can issue such ruling at any time and at his discretion.

2. Binding Private Ruling – This is an Advance Tax Ruling issued in response to an application by a person regarding the application or interpretation of the provisions of any of the aforementioned Acts in respect of a proposed transaction as it affects the applicant alone.

3. Binding Class Ruling – This is an Advance Tax Ruling issued in response to an application by a person regarding the application or interpretation of the provisions of any of the aforementioned Acts as it affects a specific class of persons.

4. Non-binding Private Opinion – This is a statement issued by the Commissioner General in response to an enquiry by a person in order to provide the person with informal guidance in respect of the tax treatment of a particular set of facts and circumstances or transaction, but which does not have any binding effect.

It should be noted that any decisions or communication issued by the Commissioner General of ZIMRA to clients in response to enquiries made by the clients, which do not fall within the categories 1 to 3 above, are classified as non-binding private opinions.

Benefits of an Advance Tax

Ruling

An Advance Tax Ruling is meant to promote consistency, clarity and certainty in the interpretation and application of the tax law.

It also assists clients in confirming the tax consequences of proposed transactions and promotes voluntary compliance by assisting them to comply with tax laws. Advance Tax Rulings are also beneficial in contract negotiation as they enable each negotiating party to understand tax obligations and concessions applicable to them to avoid confusion or conflict between the contracting parties relating to the tax implications of their transactions.

How to Apply for an Advance Tax Ruling

A client who requires a ruling should submit an application to the Commissioner General of ZIMRA on the prescribed form ATR1 which can be downloaded from the ZIMRA website www.zimra.co.zw . Applicants should ensure that all required details and the full facts of the proposed transaction are disclosed on the form. It should be noted that while applications should be submitted for the Commissioner General’s attention, they can be submitted through any of ZIMRA’s offices for our client’s ease of access. In processing the application, the Commissioner General may request any additional information from the applicant at any time which is required to assist in the issuance of a ruling.

Cases where applications for advance tax ruling may be rejected

The Commissioner General of ZIMRA may reject applications for Advance Tax Rulings in circumstances where the application:

Requires the rendering of an opinion, conclusion or determination regarding the market value of an asset

Relates to interpretation of the laws of a foreign country

Requests the interpretation or determination of pricing of goods or services supplied by or rendered to connected persons

Requires the determination of the constitutionality of any tax law

Entails a proposed transaction that is hypothetical or not seriously contemplated

The application relates to determining whether a person is a casual, part time or full time employee, or an independent contractor

Is submitted for academic purposes

Relates to a matter that is under audit, investigations or examination

Is with respect to the application or interpretation of any general or specific anti-avoidance provisions

Results in failure or refusal by the applicant to give additional information requested.

It should be noted that the above list is not exhaustive and our valued clients are encouraged to make an enquiry with ZIMRA if they require clarity on this issue.

Conditions for the Applicability of Advance Tax Rulings

The Advance Tax Ruling applies to a person only if the following conditions are satisfied: Provisions of the Act are the subject of the Advance Tax Ruling, facts presented are the same as the set of facts and circumstances governed by the Advance Tax Ruling, facts of the transaction fall within the effective period of the Advance Tax Ruling and conditions imposed by the Commissioner General of ZIMRA have been satisfied or carried out.

Reminder: Payment of Tax

Our valued clients are reminded that the PAYE and VAT for the month of July 2016 are due on or before the 10th and 25th of August 2016 respectively.