By Nyasha Nigel Machiri, Baker Tilly Chartered Accountants, Zimbabwe
Facebook has announced that they will be charging Zimbabwe advertisers value-added tax (VAT) on the sale of ads with effect from 1 September due to Zimbabwe’s implementation of VAT on the supply of electronic services.
The tax is currently set locally at 14.5%, and it will apply to both businesses and individuals.
Facebook emphasized that operators that are registered for VAT must enter their tax ID (VAT number) in the ad accounts settings of Ad Manager, and this will show up on ads receipts. This will help the registered operators to claim VAT charged by suppliers.
As a result of progressions in technology, most prominent businesses are digital, operating with little or no physical presence in different countries. Today, people spend more money online and via mobile transactions than ever before.
The growth of internet platforms has drawn the attention of tax authorities. Many jurisdictions are concerned that their taxation systems do not address well enough the digital economy, and accordingly, revenues are diluted. This has led many countries, including Zimbabwe, to introduce a digital tax.
Zimbabwe initially introduced a tax on electronic commerce operators in respect of the provision or delivery of goods or services in Zimbabwe on 1 January 2019. The income is deemed to be from a source within Zimbabwe and is taxed at a flat rate of 5%, with the taxation threshold for those e-commerce transactions being about USD 500,000.
Effective 1 January 2020, Zimbabwe introduced VAT on the supply of electronic services by an electronic commerce operator domiciled outside Zimbabwe to a person resident in Zimbabwe at the time of supply.
This supply is deemed to be a supply made in Zimbabwe. Therefore, the obligation to charge and account for the tax is that of the supplier or his or her duly appointed representative in Zimbabwe.
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