Advance tax rulings

AN Advance Tax Ruling is a written statement issued by the Commissioner General of Zimra regarding the interpretation or application of any of the Acts specified in the 1st Schedule of the Revenue Authority Act which include the Income Tax Act the Capital Gains Tax Act the Customs and Excise Act and the Value Added Tax Act Types of Advance Tax Ruling 1. Binding General Ruling — This is an Advance Tax Ruling that affects all taxpayers. The Commissioner General of Zimra can issue such ruling at any time and at his discretion.

2. Binding Private Ruling — This is an Advance Tax Ruling issued in response to an application by a person regarding the application or interpretation of the provisions of any of the aforementioned Acts in respect of a proposed transaction as it affects the applicant alone.

3. Binding Class Ruling — This is an Advance Tax Ruling issued in response to an application by a person regarding the application or interpretation of the provisions of any of the aforementioned Acts as it affects a specific class of persons.

4. Non-binding Private Opinion — This is a statement issued by the Commissioner General in response to an inquiry by a person in order to provide the person with informal guidance in respect of the tax treatment of a particular set of facts and circumstances or transaction, but which does not have any binding effect.

It should be noted that any decisions or communication issued by the Commissioner General of Zimra to clients in response to inquiries made by the clients, which do not fall within the categories 1 to 3 above, are classified as non-binding private opinions. Benefits of an Advance Tax Ruling An Advance Tax Ruling is meant to promote consistency, clarity and certainty in the interpretation and application of the tax law. It also assists clients in confirming the tax consequences of proposed transactions and promotes voluntary compliance by assisting them to comply with tax laws. Advance Tax Rulings are also beneficial in contract negotiation as they enable each negotiating party to understand tax obligations and concessions applicable to them to avoid confusion or conflict between the contracting parties relating to the tax implications of their transactions. How to Apply for an Advance Tax Ruling A client who requires a ruling should