adminDid you know that branches or divisions of a business entity are required to be registered for employee’s tax under the holding business entity unless these are registered separately under the Companies Act?
This article seeks to clarify who is required to register for employee’s tax in respect of principals and subordinate persons under the current legislation provisions.
Section 42 of the Income Tax Act [Chapter 23:06] requires every company to file with the Commissioner, a copy of the memorandum and articles of association constituting the company within 30 days of its incorporation or registration under any law.
The 13th Schedule to the Income Tax Act requires every person who becomes an employer to apply to the Commissioner for registration as an employer within 14 days of his becoming an employer.
The registered employer is required to withhold employee’s tax (PAYE) from his employees and remit same to the Zimbabwe Revenue Authority (ZIMRA).
Previously, branches and divisions were able to register as employers independent of the Head Office.
However, with effect from 1st January 2012, where an employer is a division or branch, the principal of that employer should, for the purposes of the amendment to the 13th Schedule to the Income Tax Act, have applied and be registered as an employer in place of every entity that is its subordinate person.
A principal in relation to an employer means a company, partnership or organisation which controls branches and divisions.
A subordinate person in relation to any company, partnership, organisation or other person means a branch or division under the control of a principal.
Exclusions to the definition of a subordinate person
A branch or division that is a subsidiary of a company but is registered separately under the Companies Act will not be considered a subordinate person of the principal.
Who is an employer?
An employer is any person who pays or is responsible or is liable to pay any employee, any amount by way of remuneration i.e. salary, wages, fees etc. in terms of the 13th Schedule to the Income Tax Act.
Who should register for employee’s tax?
The principal or a subsidiary which is not a subordinate person is required to register as an employer.
Summary of the obligations of a principal and subsidiary:
The registered principal or subsidiary is required to withhold and remit to ZIMRA, employee’s tax from the employees under its employ.
The principal or subsidiary will also be responsible for submitting to ZIMRA, the required Form P2 (for remittance of employee’s tax) monthly and the ITF16 (Summary of Employment Income, Deduction and Credits) annually.
Note: Any subordinate person who is still registered for employee’s tax should therefore apply for deregistration and be registered under the principal.
Reminder to Clients
Our valued clients are hereby reminded that Value Added Tax for the month of August 2014 and the 3rd Quarterly Payment Date (QPD) for 2014 are due today the 25th of September 2014.
Disclaimer
This article was compiled by the Zimbabwe Revenue Authority for information purposes only. ZIMRA shall not accept responsibility for loss or damage arising from use of material in this article and no liability will attach to the Zimbabwe Revenue Authority.
To contact ZIMRA: Visit our website: www. zimra.co.zw, Follow us on Twitter: @Zimra_11, Like us on Facebook: www.facebook.com/ZIMRA.11, Send us an e-mail: [email protected], Call us (Head Office): 04 –758891/5; 790813; 790814; 781345; 751624; 752731;
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