Fidelis Munyoro Chief Court Reporter
The Law Society of Zimbabwe (LSZ) has been exempted from Value Added Tax obligations from funds collected from its members’ subscriptions, practising certificates and professional development programme fees.
LSZ is a non-profit making association.
A dispute arose between the law society and the tax collector with the former arguing that it was exempted from collecting VAT from lawyers.
Zimra did not agree.
To remove a cloud of doubt over its liability and financial viability, the LSZ approached the High Court for a declaratory order.
Justice Lavender Makoni, now Supreme Court judge, on Wednesday ruled that the services offered by the law society under the professional development programmes qualify for exemption in terms of Section 11(b) of VAT Act.
“I find that the applicant enjoys an exemption from the Value Added Tax obligations in respect of subscription, practising certificate fees and professional development programmes fee,” said Justice Makoni.
Arguing the matter for LSZ, Mr Sternford Moyo, told the court that services in respect of which subscriptions and practising certificate fees are paid, were regulation and control of the profession by councillors.
“The councillors regulate and control the profession for the benefit of the public,” he said.
“They do not get paid. What they do is the service that applicant provides to its members. In other words, they donate their services to the applicant.”
Advocate Eric Matinenga appearing for Zimra argued that the relationship between the LSZ and a lawyer was not one of donor and donee.
He said the law society does not donate membership or a certificate without payment and a lawyer makes subscription and pays for a practising certificate fee on joining the society.
The LSZ charges and collects subscriptions and practising certificates fees approved by the Ministry of Justice, Legal and Parliamentary Affairs for regulation of the legal profession.
It also charges fees to its members for the provision of the professional development programmes.
The purpose of the professional development programmes is to strengthen skills at entry levels of the profession and to deepen expertise and refresh knowledge among experienced prac- titioners.
This is meant to uphold and improve the standard of service by the legal profession to the general public.
Had Zimra succeeded, the viability of most law firms would have been seriously challenged because no VAT had been collected from the time VAT was introduced in Zimbabwe.
Collecting VAT, penalties and interest would have rendered most law firms and the society bank- rupt.