Advanced Taxation(CUAC 408)

Assumed knowledge-
CUAC 212
 TAX PLANNING & TAX ADVICE
• Tax planning means the management of
one’s tax affairs in advance of the period
to which it relates, with a view to
minimize future tax liability.
• Involves issues about tax advice, and
timely remittance of taxes to ZIMRA.
 TAX PLANNING & TAX ADVICE
• Tax planning has the effect of minimizing
tax liability through;
avoidance of penalties and interest, as
well as;
being able to take advantage of schemes
targeted at postponing tax liability.
• Unfortunately, many taxpayers are
ignorant of such schemes.
 TAX PLANNING & TAX ADVICE
• Usually taxpayers have the tendency of
seeking expert knowledge on these
matters when things have gone wrong.
• That is when they have been visited by
the taxman.
• The legislation contains quite a number
of schemes concerning tax planning.
 TAX PLANNING & TAX ADVICE
• In order to understand the tax planning
schemes better you need to classify them
as either;
tax evasion or,
tax avoidance.
 TAX PLANNING & TAX ADVICE
(a) Tax Avoidance
• It is the legitimate ordering of one’s
affairs so as to minimize tax liability.
• Tax avoidance is permissible, unless it
falls within the terms of section 98.
• The commissioner can attack any
transaction should she assume it to be
abnormal, and that it was entered into
with the object of avoiding paying tax.
 TAX PLANNING & TAX ADVICE
(a) Tax Avoidance
• She has powers to determine the fair
market price where such a transaction
occurs.
 TAX PLANNING & TAX ADVICE
(b) Tax Evasion
• Tax evasion is illegal.
• It is the deliberate;
submission of false returns,
omission of sales from the trading
account,
overstating deductions and credits etc. –
s 46 Income Tax Act.
 TAX PLANNING & TAX ADVICE
(b) Tax Evasion
• There are;
Penalties,
Interest; and
Prosecution on tax evasion activities.
 TAX PLANNING SCHEMES
• These are schemes targeted at
minimization or postponement of tax
liability.
• There are quite a number of them in the
Acts, but we shall review the major ones.
• The schemes are available to both
companies and individual taxpayers.
 TAX PLANNING SCHEMES
Paragraph 8 (3) 4th Schedule Income Tax
Act
• According to this paragraph an election
may be made on sale of assets to transfer
the assets at income tax values as
established in the hands of the
transferor, notwithstanding the actual
selling price.
 TAX PLANNING SCHEMES
Paragraph 8 (3) 4th Schedule Income Tax
Act
• The election is permissible where the
asset(s) is sold under any of the following
schemes:
• A sale between a husband and wife, or
vice-versa.
• Where the assets are sold between
companies under the same control.
 TAX PLANNING SCHEMES
Paragraph 8 (3) 4th Schedule Income Tax
Act
• A sale of assets in a scheme of
reconstruction, or some other business
combination.
• Where a foreign company formally
operating in Zimbabwe is being taken over
by a new company formed in Zimbabwe to
take over foreign business.
 TAX PLANNING SCHEMES
Paragraph 8 (3) 4th Schedule Income Tax
Act
• Or in a scheme of conversion of a
company to a private business cooperation.
• The election would result in the
avoidance of income tax on potential
recoupment.
 TAX PLANNING SCHEMES
Paragraph 8 (3) 4th Schedule Income Tax
Act
• However, the recoupment will be taxable
if the asset(s) is subsequently sold to a
third party.
• The recoupment in this instance is
calculated as if the transferee always
owned the asset from day is was acquired
or constructed.
 TAX PLANNING SCHEMES
Paragraph 8 (3) 4th Schedule Income Tax
Act
• Where assets were transferred at ITV;
the new owner may not claim allowances
on the sale price, but
at ITV and;
no SIA can be claimed.
TAX PLANNING SCHEMES
 TAX PLANNING SCHEMES
Section 15 Capital Gains Tax Act
• The section provides for the transfer of
specified assets at values equal to
deductions i.e. Sect 11-(2) (a) to Sect 11
(2) (d), in the hands of the seller or
transferor upon election, notwithstanding
the actual selling.
• The election is permissible where a
specified asset(s) is sold;
 TAX PLANNING SCHEMES
Section 15 Capital Gains Tax Act
• Between companies under the same
control.
• In a scheme of reconstruction, or some
other business combination.
• Where a foreign company formally
operating in Zimbabwe is being taken over
by a new company formed in Zimbabwe to
take over foreign business.
 TAX PLANNING SCHEMES
Section 15 Capital Gains Tax Act
• Or in a scheme of conversion of a
company to a private business
cooperation.
• The effect is that any potential capital
gain tax on sale or disposal is postponed,
until such a time the asset(s) is sold
outside the group.
 TAX PLANNING SCHEMES
Example
Troika (Pvt.) LTD, a company incorporated in the United States has several branches
throughout the world. The company has a branch in Zimbabwe, Rom (Pvt.) Ltd. As a
result of restructuring made at its head office in the United States, a new company
was formed in Zimbabwe for the taking over of Rom (Pvt.) Ltd’s business with effect
from 1 March 2018. All the assets belonging to Rom (Pvt.) Ltd were taken over by the
new company. Some of the assets taken over were:

Asset Original cost ITV 31/12/17 Selling price

Showroom (7/12) 900,000 350,000 900,000
Plant 415,000 75,000 45,000
Factory (9/09) 750,000 140,000 6,650,000
Com building (2/12) 940,000 195,000 800,000
Required:
a) Compute any tax implications on assets taken over.
b) Outline any relevant provisions of the Acts that result in either tax minimization or
postponement.
TAX PLANNING SCHEMES
TAX PLANNING SCHEMES
 TAX PLANNING SCHEMES

Calculation of Income Tax on

Recoupment

Selling ($) ITV ($) P.Recoupment Cost ($) Capital Allowances A. Recoupment
Asset [A] [B] ($) [A-B] [C] ($) [C-B] ($)

Showroom 900,000 350,000 550,000 900,000 550,000 550,000

Plant 45,000 75,000 -30,000 415,000 340,000 -30,000

Factory 6,650,000 140,000 6,510,000 750,000 610,000 610,000

Commercial
Building 800,000 195,000 605,000 940,000 745,000 605,000

Total
Recoupment 1,735,000
Income Tax on Recoupment= 1,735,000 X
25.75%= $446,763
 TAX PLANNING SCHEMES
Calculation of Capital Gains Tax Payable
$ $
Total Sales Proceeds
Showroom 900,000
Factory 6,650,000
Commercial Building 800,000 8,350,000
Less Recoupment ( 550,000+610,000+605,000) (1,765,000)
Gross Capital Amount 6,585,000

Less Deductions
Showroom (7/12) 900,000
Factory (9/09) 750,000
Commercial Building (2/12) 940,000
2,590,000
Less Capital Allowances (550,000+610,000+745,000) (1,905,000)
Inflation allowance
Showroom (900,000 X 2,5%X7) 157,500
Factory ( 750,000 X2,5%X10) 187,500
Commercial Building (940,000X2.5%X7) 164,500 1,194,500
Capital Gain 5,390,500
Tax at 20% 1,078,100
 Tax Planning Schemes
Elections
 This is a scheme where a foreign company formally operating in
Zimbabwe is being taken over by a new company formed in
Zimbabwe to take over foreign business.
Income tax on recoupment
 The transferor (Rom) and the transferee (new company) can make
an election as per para.8(3) of the 4th schedule to the Income Tax
Act.
 The election is to transfer the assets at values equal to their Income
Tax Values (ITV) notwithstanding their actual selling prices.
 This will result in a recoupment of zero, and nil income tax on
recoupment
 However recoupment will be calculated as if the new company
always owned the assets from the day they acquired, if the assets
are later on sold to a third party
 Tax Planning Schemes
Elections
 This is a scheme where a foreign company formally operating
in Zimbabwe is being taken over by a new company formed in
Zimbabwe to take over foreign business.
Capital Gains Tax
 The transferor (Rom) and the transferee (new company) can
make an election as per section 15 of the Capital Gains Tax Act.
 The election is to transfer the assets at values equal to the
deductions for CGT notwithstanding their actual selling prices.
 This will result in a capital gain of zero, and nil CGT.
 However CGT will be calculated as if the new company always
owned the assets from the day they acquired, if the assets are
later on sold to a third party.
Advanced Taxation(CUAC 408)

Assumed knowledge-
CUAC 212
 SECTION 16 CGT ACT
 The section provides for the transfer of a
specified asset(s) between spouses, whether in
the normal course of trade or by the order of
the court.
 If the taxpayer so elect transfer may be
effected at values equal to deductions i.e. sect
11 (2) (a) to sect 11 (2) (d), notwithstanding the
actual selling price.
 Any potential tax on capital gain on disposal is
postponed until such a time when the asset(s) is
sold to any person who is not the spouse of the
 SECTION 17 CGT ACT
 It provides for the transfer of asset(s) previously
used by an individual for purposes of his trade
at values equal to deductions [i.e. sect 11 (2)
(a) to sect 11 (2) (d)], to a company owned by
him upon election, notwithstanding the actual
selling price.
 It is important that the person should hold a
majority shareholding in the company.
 The effect is to postpone any potential tax on
gains resulting from the transfer.
 Provided that capital gain shall be calculated on
 SECTION 17 CGT ACT
Mr. Marvelous Mike has been operating a retail business in Chinhoyi since 1 July 2009.
On 1 January 2015 Mr. Mike transferred a commercial building previously owned by
him in his retail business to a new company in which he holds 60% of the shares. The
building was transferred at a market value of $250,000. Its original cost was $50,000
when it was constructed in 2009. Income tax value at date of transfer was $13,500.

Comment on any tax implication on disposal assuming the building was later sold
outside the group 31 May 2016 for $300,000.
Support your comment by relevant computations.
 SECTION 17 CGT ACT

Transfer of assets from Mike to the New Company

Capital Gains Tax
• Mike holds 60% of the shares in the new company;
therefore it is presumed that he controls the
company.
• The scheme therefore qualifies as a transfer of
assets from an individual to a company under his
control.
• An election can therefore be made as per section
17 of the CGTA to transfer the assets at values equal
to the deductions for CGT notwithstanding their
actual selling price.
 SECTION 17 CGT ACT

Transfer of assets from Mike to the New Company

Capital Gains Tax
• However, if the assets are later on sold to a third-
party, CGT will be calculated as if the new company
always owned the assets from the time they were
acquired.
 SECTION 17 CGT ACT

Transfer of assets from Mike to the New Company

Income Tax
• There is no corresponding ITA provision that would enable
Mike to avoid income tax on recoupment.
• Therefore income tax on recoupment should be calculated
as follows;
• Potential recoupment(PR) =selling price(250,000)-
ITV(13,500)=$236,500.
• Capital allowances(CA)= Cost (50,000)-
ITV(13,500)=$36,500.
• Actual recoupment=Lower of PR and CA=36,500.
• Income tax liability=25,75% X$36,500=$9,399.
 SECTION 17 CGT ACT

Transfer of assets from New Company to Third Party

Income Tax
• Income tax will be calculated as follows;
 Capital allowances for 2015 (50,000X2.5%)=$1,250.
 ITV at 31 May 2016= ITV at 1 Jan 2015 (13,500)-CA for 2015
(1,250)=$12,250.
 Potential recoupment (PR)= Selling Price(300,000)-
ITV(12,250)=$287,750.
 Capital Allowances(CA)-Cost (50,000)-ITV(12,250)=$37,750.
 Actual recoupment=lower of PR and CA=$37,750
 Income tax on recoupment=24.72%x$37,750=??
 SECTION 17 CGT ACT

Transfer of assets from New Company to Third Party

Capital Gains Tax
• CGT will be calculated as follows;
Calculation of Capital Gains Tax Payable
$ $
Total Sales Proceeds 300,000
Less Recoupment (37,750)
Gross Capital Amount 262,250

Less Deductions
Cost 50,000
Less Capital Allowances (37,750)
12,250
Inflation Allowance ( 50,000 X2.5%X8) 10,000 22,250
Capital Gain 240,000
Tax at 20% 48,000
 SECTION 22 CGT ACT
A taxpayer may elect to rollover/
postpone any potential capital gains on
disposal of a business asset, provided the
proceeds from sale of the asset are
utilized in construction or purchasing of
an asset of a similar nature before the
end of the year following that of disposal
or sale thereof.
The gain to be taxed will be reduced by
the following formula (rollover):
 SECTION 22 CGT ACT
 (A x C)/B
 Where:
A is the expended portion or proceeds
B is proceeds on sale of business asset
C is capital gain accruing from the sale of
asset
• Where an amount has been rolled over it
shall be used in reduction of the cost (s
11 (2) (a) of the new immovable asset.
 SECTION 22 CGT ACT
Mr. Rice, a retail businessman, sold his business lock,
stock and barrel, when he re-located to Murewa Growth
point on 31 December 2025. Among the assets sold was
an industrial building sold for $3.5 million, originally
constructed for $850,000 in March 2019 tax year. The
income tax value at date of disposal, 31 December 2025
was $550,000. Of the proceeds received from sale of
Industrial building $2,500,000 was utilized on
construction of a similar industrial building at the
growth point. Mr. Rice turned a farmer on 25 January
2027; as a result, he sold his business to a local
businessman, fetching $7million on the industrial
 SECTION 22 CGT ACT
Required.
•Capital gains implications on disposal of
the two buildings. Assume relevant
elections were made.
 1st Industrial Building

 Capital allowances(CA) =Cost ($850,000)-

ITV($550,000)=$300,000.
 Potential recoupment(PR)=Selling Price
($3,500,000)-ITV(550,000)=$2,950,000.
 Actual recoupment=lower of CA and potential
recoupment=$300,000.
 Part of the proceeds($2,500,000) were used to
acquire another business property in replacement.
 Therefore rollover relief can be claimed.
 CGT liability is therefore calculated as follows;
 1st Industrial Building

Calculation of CGT: 1st Commercial Building

$ $
Total Sales Proceeds 3,500,000
Less Recoupment (300,000)
Gross Capital Amount 3,200,000

Less Deductions
Cost 850,000
Less Capital Allowances (300,000)
550,000
Inflation Allowance ( 850,000 X2.5%X7) 148,750 698,750
Potential Capital Gain 2,501,250
Less Roll Over relief (2500/3500)X2,501,250) (1,786,607)
Taxable Gain 714,643
Tax @ 20% 142,929
 2nd
Industrial Building

• Capital allowances (2026)=2,500,000X25%(SIA-

Growth Point)=$625,000
• ITV=Cost (2,500,000)-CA(625,000)=$1,875,000
• Potential Recoupment (PR)=Selling
Price(7,000,000)-ITV(1,875,000)=$5,125,000.
• Actual Recoupment=lower of CA and PR=$625,000
• The rollover relief on the sale of the 1st Industrial
Building is used to reduce the cost of the 2nd
Industrial Building because it is sold without
replacement.
• CGT on the 2nd IB is therefore calculated as follows
 2nd
Industrial Building

Calculation of CGT: 2nd Industrial Building

$ $
Total Sales Proceeds 7,000,000
Less Recoupment (625,000)
Gross Capital Amount 6,375,000

Less Deductions
Cost 2,500,000
Less Roll Over relief from 1st Industrial. Building (1,786,607)
Less Capital Allowances (625,000)
88,393
Inflation Allowance ( 2,500,000 X2.5%X2) 125,000 213,393
Capital Gain 6,161,607
Tax @ 20% 1,232,321
Advanced Taxation(CUAC 408)

Assumed knowledge-
CUAC 212
 ASSESSED LOSSES S15(3) ITA
 An assessed loss is an allowable deduction in
terms of s 15 (3).
 The section allows such a loss to be set-off
against income of any other business activity
owned by the same person.
 Any assessed loss not set-off can be carried
forward and claimed against future income.
 Assessed loses can be carried forward for 6
years.
 However for mining entities they can be
carried forward indefinitely.
 ASSESSED LOSSES S15(3) ITA
 An assessed loss however, cannot be carried
forward in the following circumstances:
 By a taxpayer who has been declared
insolvent.
 Where there has been a change of ownership
(shareholding), and it is established that the
change was mainly influenced by the existence
of an assessed loss.
 In a scheme of localization of foreign company
unless there is no change in shareholding.
 ASSESSED LOSSES S15(3) ITA
The advantage of utilizing assessed loss
rest in its effect to reduce the amount to
be taxable.
In that sense it is beneficial for a
company anticipating high profits in the
future to takeover a company with huge
balances of assessed loss.
Thus companies with losses are usually
targets for takeover by prudent financial
managers.
 ASSESSED LOSSES S15(3) ITA
 Once an election is made to carry forward
assessed loss to the new company, the old
company can’t utilize that loss anymore.
 Therefore, it makes sense for the election to
be made as well in terms of paragraph 8 (3),
4th schedule Income Tax Act, otherwise the
old company might be taxed heavily in case
there was going to be potential recoupment as
result of transfer of assets;
• With no corresponding expenses to utilized in
the reduction of amount to be taxed.
 ASSESSED LOSSES S15(3) ITA
As a financial manager of a company with
huge balances of assessed losses it pays
to minimize your expenses.
It therefore pays to claim wear & tear
instead of special initial allowance if the
company is making losses, and the trend
is expected to continue for more than 6
years.
ASSESSED LOSSES S15(3) ITA
 EMPLOYMENT VS CONSULTANCY
Sometimes a question may be raised on
whether one should be an employee or
an independent contractor/consultant.
In such a case an option with the least
tax liability should be chosen.
An employee is taxable using individual
rates, and is not allowed to claim any
expenses from employment except for a
few prescribed in sect15 (2) (h) and
sect.15 (2) (i).
 EMPLOYMENT VS CONSULTANCY
 A consultant is taxable at 24,72% i.e. income
from trade and investments.
 He is also required to register for VAT where
his sales value exceeds the required threshold.
 Where he has registered for VAT he must
charge 14.5% on services provided unless they
are exempt or zero rated.
 The tax so charged must be paid to ZIMRA by
the 25th of the following month after the tax
period.
 EMPLOYMENT VS CONSULTANCY
A consultant is allowed to claim business
expenses in the assessment of his taxable
income.
 TAX HOLIDAY
It is prudent for an organization to claim
wear & tear in lieu of SIA where it is
enjoying a period of tax holiday .
Additionally, capital expenditure can be
deferred to period after the tax holiday.
Such an arrangement would result in
postponement or minimization of tax
liability.
 VAT REGISTRATION

Being a registered operator has several

advantages.
 Housing loans or Construction of houses for employees :
You may be called upon to assess
whether it is tax efficient for a company
to provide loans to its employees for the
construction of houses, or whether the
company should construct the houses for
its employees.
Loans provided free of interest or below
prescribed rates would be regarded as a
taxable benefit in the hands of an
employee in terms sect 8(1) (f).
 Housing loans or Construction of houses for employees :
If the company constructs the houses it
will be granted capital allowances
subject to a restricted cost
ZWL$12,500,000 per each unit of staff
housing.
 Company cars for employees or loans to
employees
Ideally, company cars bought by a
company for use by employees whether
for private or business purposes qualifies
for capital allowances in terms of section
15 (2) (c).
Related motor running expenses are also
allowable as a deduction.
The employee will however, be taxable
on the private benefit in terms of s 8(1)
(f) depending on the engine capacity.
 Company cars for employees or loans to
employees
The effect to the company is the
reduction of taxable income available as
result of the expenses claimed.
Should the company provides loans to
employees for the purchase of cars for
use by the employee in the business of
the employer, no capital allowances may
be claimed since the car is owned by the
employee, related running expenses are
also not allowable to the company.
 Company cars for employees or loans to
employees
The employee will be taxable on the loan
benefit in terms of s 8 (1) (f) depending
on the loan provided or whether the
employer charges no interest or below
the stipulated rates.
If the employee uses the personal car on
the business of the employer in return for
compensation, the transaction may well
be taken to be the hiring of the car.
 Company cars for employees or loans to
employees
The employee will be taxable on the
compensation (deemed rentals), and will
be taxable using the business income rate
24.72%.
The company may in that case claim the
related hiring expenses, but not capital
allowances, subject to a maximum of
ZWL$5,000,000 in respect of a passenger
motor vehicle – s 16(1) (k).
Advanced Taxation(CUAC 408)

Assumed knowledge-
CUAC 212
 Other Individuals schemes
 Employees are also capable of taking
advantage of schemes outlined in the Acts in
order to minimize their tax liability i.e
commute pension in terms of sect 8 (1) (n) or
sect 8 (1) (r) etc, maximum utilisation of
exempt benefits such as medical aid
contributions by employer or more allowances
for civil servants etc.
 All such cases will result in more disposal
income in the hands of a taxpayer.
 Other Individuals schemes
We are unable to exhaust all schemes, in
your studies we hope you will come
across some of them.
 Gross Income & Exemptions
• Recognise that both cash and goods given for
services rendered are part of gross income.
(s8)
• The employer has to register for PAYE within
14 days of becoming an employer (13th
Schedule, para.2(1)) and also notify the
commissioner of any changes within 14 days.
• The employer should account for employee tax
for each employee, submit the return and
payment by the 10th of the following month,
and an annual return within 30 days from YE.
 Gross Income & Exemptions
• Payment of income tax for companies based
on QPDs.
• Fees for non-executive directors are not
remuneration but income from trade and
investment. However no longer liable to
income tax but just WHT at 20%.
• S8(1)(f) Benefits connected with employment
should be brought into gross income.
• However, the following benefits are
exempted;
 Gross Income & Exemptions
• medical benefits,
• refunds from medical aid society or benefit
funds,
• contribution to pension funds,
• compensation for injury, sickness or death,
• pension received by elderly person,
• allowances for civil servants,
• scholarships,
• bonus (max. ZWL$500,000 or US$700),
• motor vehicle purchase benefit for elderly.
 Gross Income & Exemptions
• 50% of school fees benefit with respect to a
maximum of 3 children of the taxpayer, are
exempted,
• 1/3 of total pension entitlement for
commutation of pension from RAF,
• disallowed contributions,
• portion of retrenchment package.
• Use exemptions applicable to elderly persons.
 Exemptions
 Use exemptions on trade and investment
income; namely,
• interest from financial institutions in
Zimbabwe,
• Interest from POSB Zimbabwe,
• dividends from a local company,
• export incentive grants,
• interest on loans to approved statutory
corporations,
• interest on loans to small scale miners,
 Exemptions
• grants and subsidies for capital expenditure.
 Allowable Deductions
Use all allowable deductions being
expenditure /losses for purposes of trade
including;
• lease premiums,
• lease improvements,
• capital allowances,
• pension and medical aid contributions (for
companies),
• repairs,
• bad debts
 Allowable Deductions
• educational grants, bursaries and scholarships,
• voluntary payments to former employees/their
dependancies,
• specific allowable donations,
• subscriptions to professional associations,
• purchases, opening stock, donated and
inherited stocks introduced into the business,
• attendance to conventions and trade missions,
• legal costs on income tax appeals.
 Allowable Deductions
• Recognise prohibited deductions,
• Use double deductions for scientific
experiments and export market development.
• Recognise that partners are taxed using a rate
for trade and investment income.
• Use special deductions for farmers as per 7 th
schedule and exemption on recoupment.
 Tax Credits
 Use tax credits for;
• disabled persons,
• blind person,
• medical credits, and
• elderly persons’ credits.
 Take advantage of circumstances where the
credit is granted for children, dependancies
and spouse.
 Capital Gains Tax
• Remember to account for capital gains on sale
of immovable property and marketible
securities.
• Account for recoupment and capital
allowances when calculating CGT.
• Recognise that proceeds charged income tax
are exempted under CGT.
• Adhere to due dates for submission (within 30
days for CGT, and within 3 days for CGT
withholding tax).
• Always keep receipts.
 Capital Gains Tax
• Take advantage of deductions, such and cost
and ancillary expenses, inflation allowances,
selling expenses, suspensive sale, roll over
reliefs etc.
• Include deemed sales in gross capital amount
e.g donations and assets sold in execution of a
court order.
• Account for CGT where compensation is
received for an asset that is damaged or
destroyed (section 13).
 Capital Gains Tax
 Use exemptions such as;
• distributions by deceased estate,
• sale by life insurance business,
• sale of PPR by an elderly person,
• sale of listed marketible securities,
• first ZWL$900,000 on sale of marketible
securities by an elderly person,
• sale of shares under indigenisation schemes.
 Value Added Tax
• Register immediately within 30 days if threshold is
reached (US$40,000 or rtgs equivalent per annum).
• Register voluntarily to enjoy the related benefits e.g
ability to claim input tax.
• Keep valid tax invoices to be able to claim input tax.
• Issue tax invoices, debit and credits notes as
appropriate if registered.
• Submit VAT return and payment by the 25th of the
following month after the end of the tax period.
 Value Added Tax
• Distinguish between exempt and zero-rated
supplies and the implications.
• Take advantage of input tax on taxable
supplies made for purposes of trade,
Also recognise prohibited deductions such as;
• VAT on purchase of a PMV,
• entertainment expenses, and
• subscriptions to recreational and sporting
associations.
 Value Added Tax
• Account for input tax and output tax on sale
and purchase of brand new and second hand
vehicles, including PMVs.
• Account for output tax on fringe benefits such
as motor vehicle benefit and cell phone use.
• Exempt benefits such as residential
accommodation, pension, loans, loans, and
medical expenses paid for by employer,
canteen meals.
• Calculate VAT on imports based on vatable
amount.
 Value Added Tax
• Account for VAT on imported services.
• Fiscalisation.

END OF CHAPTER