A Complete Guide On Customs Duty And Taxes For Imported Vehicles In Zimbabwe

Date: 18th December, 2019
Category: Rules and Regulations

A Complete Guide To Customs Duty and Taxes For Imported Vehicles In Zimbabwe

Basic Terminology

  1. FOB (Free Onboard): This is the upfront cost of the imported car before transport, insurance, and inspection fees are added.
  2. CIF (Cost of Insurance and Freight): The CIF value of the imported vehicle is an aggregate of the FOB, insurance, freight and any other charges incurred outside Zimbabwe.
  3. VTP (Value for Tax Purposes): This is the amount that totals after adding the CIF to the duty and is used to derive VAT
  4. VAT (Value Added Tax): The total amount calculated from adding the CIF and the VTP.
  5. VDP (Value Duty Purposes): The amount used to derive the duty of a car and is the total of the CIF and other charges incurred.

Steps To Take When Calculating Customs Duty For Imported Vehicles in Zimbabwe

  1. Collect vehicle information and the FOB: Different vehicles are subjected to different taxes. There are a number of factors that determine how much you will incur in taxes. Such as:
    • Vehicle type: if the vehicle such as Pick-up Trucks, Vans, Commercial trucks and buses are paid for in local ZWD while Cabs, Sedans and SUVs are paid for in hard USD.
    • Age of the vehicle: Zimbabwe does not have any age restrictions on imported vehicles but it is good to know that vehicles over 5 years attract an extra 35% surtax.
  2. Calculate CIF: The CIF value of a car is an aggregate of the cost of the car, insurance, freight and any other charges incurred outside Zimbabwe. This is covered later in this article under Calculating Customs Duty.
  3. Convert amount to USD. Any other currencies e.g in GBP or Euro must be converted to USD.
  4. Calculate the Customs Duty, Taxes and Fees: Find below a brief explanation on how Customs Duty and Taxes are calculated in Zimbabwe.

Calculating Customs Duty

There are a number of calculators online that make it easier to calculate taxes, but this guide should help you understand how these values are derived. We took the liberty to include a summary of examples of how Customs duty is calculated in Zimbabwe.

Note: both Customs Duty and Surtax are calculated on the Value for Duty Purposes or VDP. VAT is calculated on the total of VDP plus the calculated Customs Duty payable.

VAT is then calculated on the total of VDP plus the calculated Customs duty Payable to give a value known as Value for Tax Purposes.

Duty is calculated based on the Cost, Insurance and Freight (CIF) value of the imported goods. The CIF value of the imported goods is an aggregate of the cost of the vehicle, insurance, freight and any Other Charges incurred outside Zimbabwe. Other Charges include, where applicable:

  1. Port handling charges which vary from port to port.
  2. Storage charges.
  3. Any other special handling fees, if not already included in the CIF Value.

Here is an example of how to calculate your Duty:

(Note all values will be in $)

Example 1

If the car was a station wagon manufactured is less than 5 years old:

Let’s say the CIF value is $6000.

If there are no other charges then the VDP is $6000

Since Duty is 40% of  VDP then the Duty = $2400

Therefore, the VTP is $6000+$2400 = $8400

Which we then use to calculate the VAT

VAT = 15% of 8400 = $1260

The Total Amount of Duty Payable is then:

Duty + VAT= $2400+$1260= $3660

Therefore, you will pay a total of $3660 in Customs duty

Example 2

If the car was a station wagon manufactured is more than 5 years old:

Let’s say the CIF value is $4000.

An additional charge of $1200 in other charges

The VDP is then raised to $4000+$1200 = $5200

Since Duty is 40% of VDP then the Duty = $2080

Remember, cars more than 5 years old include a Surtax of 35%

Surtax = 35% of $5200 = $1820

Therefore, the VTP is VDP + Duty = $5200+$2080 = $7280

Which leads us to calculating the VAT

VAT = 15% of 7280 = $1092

The Total Amount Duty Payable is then:

Duty + VAT + Surtax= $2080+$1092+$1820= $4992

Therefore, you will pay a total of $4992 in Customs Duty.

Find more examples as shown on the ZIMRA website below:

Year of Manufacture/Type of vehicle

Engine Capacity/Payload

CIF Value

$

Other Charges

$

VDP

$

Duty

$

Surtax

$

VTP

$

VAT

$

Total amount payable

$

2012

Sedan/ Station Wagon

1495cc

6 000

6 000

@40% = 2 400

8 400

@ 15%

=1 260

3 660

2005

Sedan/Station Wagon

1495cc

4 000

1 200

5 200

@ 40% = 2 080

@ 35% = 1 820

7 280

@ 15%

= 1 092

4992.00

2001

Sedan/Station Wagon

1800cc

5 000

900

5 900

@ 40% = 2 360

@ 35% = 2065

8 260

@ 15%

= 1 239

5 664

2012

Sedan/ Station Wagon

3000cc

10 000

600

10 600

@ 40%

= 4 240

14 840

@ 15%

= 2 226

6 466

2004

Pick -up truck

Payload of up to 800kg

3 000

1 000

4 000

@25%

=1 000

5 000

@ 15%

= 750

1 750

2005

Pick -up truck

Payload more than 800kg but not exceeding 1400kg

4 000

1 200

5 200

@40%

= 2 080

7 280

@ 15%

= 1 092

3 172

2002

Pick- up truck

Payload more than 1400 kg but with a gross vehicle mass of less than 5 tonnes

7 000

1 500

8 500

@40%

= 3 400

11 900

@15%

= 1 785

5 185

2007

Double Cab

2500cc

7 000

1 500

8 500

@60%

= 5 100

13 600

@15%

= 2 040

7 140

Tax Rebates/Tax Exemptions

Designed by macrovector / Freepik

Certain special groups are exempt from paying taxes on imported goods and these are:

  1. Returning residents
  2. Handicapped persons
  3. Diplomats
  4. Temporary Import Permits

However, to qualify for a tax rebate certain documents need to be produced.

For Returning Residents:

  1. Proof of employment or residence permit
  2. Proof that one has completed studies for a person who has been pursuing studies
  3. Proof that one has terminated the contract of employment for a person who has been on a contract of employment
  4. Proof of absence from Zimbabwe for a person who has been on an extended absence from Zimbabwe
  5. A declaration on the prescribed form stating that the effects and other goods were owned by the immigrant at the time of arrival and at their time of importation
  6. In the case of a motor vehicle, a declaration stating that a rebate has not been granted to him/her in respect of a motor vehicle during the previous four years
  7. A declaration that the effects and other goods are intended for the immigrant’s own use in Zimbabwe and will not be used for trade or commercial purposes
  8. A written undertaking that the effects and other goods will not be sold or disposed of in any manner and that the immigrant shall not leave Zimbabwe for a period of more than six months within 24 months of arrival
  9. A written undertaking to pay such duty as may become due if one decides to sell or dispose of in any manner or if  he/she decides to leave Zimbabwe for a period of more than six months within 24 months of clearance
  10. A written undertaking to notify the Commissioner General of ZIMRA of any change in residential address within 14 days of the change of address
  11. Satisfactory evidence relating to the acquisition, ownership or purchase of the vehicle.

For the Physically Handicapped:

  1. Application letter
  2. Proof of source of funds
  3. Copy of identification particulars
  4. Proof of current residence
  5. Current letter from a specialist doctor stating the following:
        • The nature and degree of disability
        • Giving indications of the type of vehicle you could drive under the circumstances
        • The extent of disability (whether it is temporary or permanent)
  6.  An invoice/proforma invoice /document for the recommended motor vehicle which should include the following information:
        • Engine number
        • Chassis number
        • Type of transmission
        • Year of manufacture

For Temporary Import Permits:

  1. Valid passport of the driver.
  2. Vehicle registration book in the name of the driver.
  3. Letter of authority from the registered owner if, the vehicle is not owned by the driver.
  4. Temporary exportation document processed by the Customs authorities in the country from where the visitor is coming.

 

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Sources

  1. Excise Duty On 2nd Hand vehicle change of Ownership:https://www.zimra.co.zw/customs/special-excise-duty-on-change-of-ownership-of-second-hand-motor-vehicles
  2. Tax rebate on Immigrants: https://www.zimra.co.zw/news/22-taxmans-corner/122-rebate-of-duty-on-immigrants
  3. Calculation on Importation of Private Motor Vehicles: https://www.zimra.co.zw/customs/calculation-of-duty-on-importation-of-private-motor-vehicles-and-suspension-of-duty-on-motor-vehicle-imports-by-the-physically-handicapped-persons
  4. Temporary Import Permits: https://www.zimra.co.zw/news/114:understanding-the-temporary-importation-permit-tip-for-visitors-vehicles