ZIMBABWE’S value-added tax (VAT) enforcement framework is facing legal scrutiny amid claims that its multi-currency compliance system may lack a proper statutory basis, potentially undermining constitutional principles and parliamentary authority, legal experts have warned.
According to a new analysis by legal analysts, the dispute centres on the multi-currency VAT compliance framework that rests on what they describe as a legally defective foundation, potentially invalidating significant assessments issued by the Zimbabwe Revenue Authority (Zimra).
The controversy stems from a dual-lane VAT system, which requires separate reporting and payment for United States dollar (USD) and local currency transactions.
Legal analysts argue that this structure is not grounded in legislation or formal regulations, but instead originates from a series of public notices issued by the Zimra Commissioner-General.
They contend that these notices are ultra vires, as they allegedly exceed administrative authority by introducing new tax obligations and effectively altering provisions of the VAT Act — powers reserved for Parliament.
The controversy comes after earlier concerns raised by accounting firm Deloitte (now Axcentium) in March 2022, which advised the Ministry of Finance that Zimra’s interpretation was “contrary to the spirit of VAT” and misaligned with the VAT Act.
Deloitte argued that VAT requires a net calculation where input tax is offset against output tax, regardless of currency.
The firm further warned that collecting VAT separately based on currency — without applying the composite computation under Section 15 — undermines the purpose of the Act.
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It also noted that Section 28 provides for a single VAT (VAT7) return, cautioning that the Commissioner-General appeared to be effectively creating new obligations through administrative means.
To date, no specific provision in the VAT Act has been cited to justify abandoning the single-return framework, aside from reliance on case law such as Prosperous Day v Zimra HH24/21 and Inamo v Zimra SC96/23.
Central to the legal challenge is the hierarchy established under section 78 of the VAT Act, which vests regulatory powers in the Minister of Finance through statutory instruments, not administrative public notices.
However, public notices including PN 15/2019, PN 68/2022 and PN 75/2022 introduced a bifurcated registration system, requiring separate business partner (BP) numbers for each currency stream — a structure not in either the Act or its regulations.
Similarly, the VAT return framework embedded in the Tax and Revenue Management System, which separates reporting into two currency columns, departs from the statutory format prescribed in VAT Regulations and, critics argue, cannot lawfully underpin additional tax assessments.
Analysts say this administrative approach effectively overrides key statutory provisions: Section 9(3), which requires conversion of all transactions into a single reporting currency; Section 15, which mandates a net VAT computation combining input and output tax; and section 28, which enforces a single VAT return per taxpayer per period.
Authorities, however, are standing firm.
Treasury’s permanent secretary George Guvamatanga dismissed corporate resistance, characterising objections as selective compliance based on convenience.
“We have noticed a trend where corporates want to pick and choose which parts of the tax code to follow based on their own convenience,” he said.
“Let me be very clear: the obligation to pay tax in the currency of trade is not a suggestion.
“It is a statutory requirement that has existed since 2019.
“If you collected US dollars from a customer and failed to remit those specific dollars to the state, you are in default.”
Added Guvamatanga: “We are not creating new law; we are simply enforcing the law that was already there.
“To those seeking to bypass these obligations through the courts: the fiscus will not be held hostage by ‘technicalities’ when the intent of the legislature was always clear.”
He told companies to “negotiate” on previously unassessed taxes — because if they go to court, they will lose.
Despite this stance, legal practitioner Paida Makoni recently argued that the government’s reliance on legislative intent is legally insufficient.
Makoni pointed to the principle of nullum tributum sine lege — no taxation without law — noting that Zimra’s mandate, as affirmed in Curverid v Zimra (SC 114/25), is strictly confined to what is explicitly provided in statute.
Makoni and other critics contend that current assessments often amount to “supplementation rather than correction,” producing inflated liabilities by disregarding Zimbabwe dollar (ZWL) credits.
They further cite High Court rulings such as Woodthorpe Investments v Zimra (HH 220-26) and JK Motors v Zimra (HH 762-22), which outline what has been termed a “nullity pathway”.
Under this doctrine, an assessment issued under the wrong legal authority — for example, a public notice instead of a statutory provision — is void from the outset and cannot activate the mandatory “pay-now-argue-later” rule.
