Harare, (New Ziana) – 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.
In a statement, ZIMRA said 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.
New Ziana
