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ZIMRA clarifies livestock valuation for Tax purposes

29 Jan, 2025 - 12:01 0 Views
ZIMRA clarifies livestock valuation for Tax purposes

The Zimbabwe Revenue Authority (ZIMRA) has shed light on the valuation of livestock for taxation purposes, emphasizing the importance of accurate reporting in accordance
with the Income Tax Act.
ZIMRA said in a statement that the guidance is particularly relevant for farmers as they prepare their financial statements for the upcoming tax season.
According to Section 8 (1) (h) of the Income Tax Act, along with paragraph 10 (1) of the Second Schedule, farmers are mandated to include the value of their closing stock as part of their gross income.
The closing stock encompasses a wide range of livestock, including cattle, sheep, goats, pigs, crocodiles, poultry, horses, ostriches, and zebras.
“ZIMRA distinguishes between two categories of livestock: stud and ordinary. Stud livestock, which is intended for breeding purposes, differs significantly from ordinary livestock, which is either born on the farm or purchased for reasons other than breeding.
“This classification is crucial as it affects the valuation and subsequent tax implications for farmers,” the tax collector said.
To facilitate compliance, farmers are allowed to choose their valuation method for livestock. However, this election must be made during the first income return and is subject to the approval of the Commissioner of ZIMRA.
Once approved, these values remain in effect until a review is deemed necessary by the farmer.
Any changes in valuation also require the Commissioner’s approval, ensuring a consistent and transparent process.
“This directive from ZIMRA aims to enhance the accuracy of income reporting among farmers, which is essential for the overall integrity of the tax system.
“As the agricultural sector continues to play a vital role in the Zimbabwean economy, the clarity provided by ZIMRA will help farmers navigate their tax obligations more effectively,” it said.
Farmers are encouraged to seek guidance from ZIMRA if they have questions regarding the valuation of their livestock, ensuring they remain compliant with the tax regulations while maximizing their potential deductions.
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