AT INTERNATIONAL LTD v COMMISSIONER-GENERAL, ZIMBABWE REVENUE AUTHORITY
HIGH COURT, HARARE
[Value Added Tax Appeal HH 823-15]
January 21 and October 21, 2015
Revenue and public finance – Value added tax – Liability of foreign registered company to pay value added tax in Zimbabwe.
The appellant, a foreign registered company had supplied commodities to D & T, a local subsidiary of a holding company called WG under a line of credit registered with the Reserve Bank of Zimbabwe (RBZ) until the introduction of the multi currency regime on 29 January 2009. Investigations conducted by the respondent revealed non-payment of value added tax (VAT) on the supplies and that D & T had been paid commission on the invoiced supplies from 1 January 2006 to 31 January 2009.
The respondent made written demand on the finance director of the holding company who was also the public officer of D & T for the payment of VAT on the invoiced income paid to the appellant during that period. On 12 March the respondent appointed the chief executive officer of the holding company as the public officer for the appellant in terms of s 61 of the Income Tax Act [Chapter 23:06] on the ground that his company was closely linked and connected to the appellant’s local trading activities. On 25 March the appellant wrote to the respondent objecting to the appointment of the pubic officer outside its registered place of business and to the tax liability claim on the basis that it did not maintain offices nor employ staff nor was it a VAT registered operator obliged to charge VAT on goods purchased from its foreign based operations and supplied to clients in Zimbabwe.
Held, that notwithstanding the contents of the bills of entry and other documents compiled by or at the instance of the appellant to the contrary, the appellant was the owner or possessor of the goods who would also have a beneficiary interest in them before they entered Zimbabwe.
Held, further, that the activities of the appellant did constitute trading in Zimbabwe.
Held, further, although the appellant was not a registered operator, every trader in this country is liable to be registered for VAT from the date of such liability and the appellant under the provisions of s 23(4) of the Value Added Tax Act [Chapter 23:12] is deemed to have been a registered operator.
Held, further, that where a voluntary appointment of a public officer of the appellant is absent, s 61(4) of the Value Added Tax Act empowers the Commissioner to designate one from amongst the managing director, director, secretary or other officer of the company as the public officer, and s 49(2) empowers the Commissioner to compulsorily appoint an agent from any holder of money due to or belonging to the taxpayer as the representative registered operator.
Commissioner of Taxes v ‘A’ Company 1979 RLR 29 (A); 1979 (2) SA 409 (RAD); 41 SATC 59 (RAD), referred to
Fawcett Security Operations (Pvt) Ltd v Director of Customs and Excise and Ors 1993 (2) ZLR 121 (S), applied
Mayhew v Alcock NO 1991 (2) ZLR 203 (S), applied
S v Karge and Another 1971 (3) SA 470 (T), referred to
Young v Van Rensburg 1991 (2) ZLR 149 (S), distinguished
Civil Evidence Act [Chapter 8:01], s 12
Customs and Excise Act [Chapter 23:02], s 2
Income Tax Act [Chapter 23:06], s 61
Finance Act 2006 (No 6 of 2006), s 16
Finance Act 2009 (No 3 of 2009), s 29
Value Added Tax Act [Chapter 23:12], ss 6, 23(3) and (4)(b), 56(1) and (3)
AP de Bourbon, for the appellant
T Magwaliba, for the respondent
The answer sought in this appeal is whether, the appellant, a foreign registered company is liable to pay value added tax in Zimbabwe. The appellant disputed liability for value added tax (VAT) arising from the purported importation of goods into and the carrying on of trade in Zimbabwe and appealed against a contrary determination of the respondent.
The appellant is an international business company incorporated on 19 May 2005 in Guernsey in the Channel Islands but is not permitted to trade in that jurisdiction. The respondent is a body corporate responsible for the collection, amongst other imposts, of VAT in Zimbabwe.
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