adminsector of the economy.
These include small and medium companies, co-operatives, sole traders and informal traders. Activities include retail, informal traders, service provision, manufacturing and mining, among others.
Tax Obligations
The operations of SMEs may give rise to obligations for any or all of the following taxes: Presumptive Tax, Income Tax, Value Added Tax, Pay As You Earn, Withholding Tax, among others.
Presumptive Tax
Tax on the earnings of small traders who may not be required to register for Income Tax is based on estimated income and is referred to as Presumptive Tax. Operators liable to this tax are not expected to submit Income Tax returns.
Examples of operators in this category include cross-border traders, furniture making traders, transport operators, small-scale miners, restaurant operators, flea market operators and small miners, among others.
These operators are required to pay Presumptive Tax each quarter on the 10th day of the following months: January, April, July and October. The different Presumptive Taxes payable by each business sector are available on the Zimra website.
Income Tax
Every business operator who is not eligible to pay presumptive tax is required to register for Income Tax purposes with Zimra and comply with statutory requirements regarding the submission of returns and payment of taxes.
In the case of a company, it would be required to furnish the memorandum and articles of association to Zimra within 30 days of incorporation. In addition, the company is also required to nominate a public officer through whom all correspondence with Zimra is channelled.
Please note that the rate of tax on taxable income is currently 25 percent plus 3 percent Aids Levy.
Special Initial Allowance for SMES
SMEs that are registered for Income Tax with Zimra are eligible for applicable deductions provided for in the Income Tax Act in respect of expenditure related to their business operations.
As a special tax incentive, SMEs may be eligible to enjoy 100 percent Special Initial Allowance on qualifying capital assets of which 50 percent is allowed in the first year and 25 percent allowed in each of the two subsequent years.
Employees’ Tax
Every business operator who is registered for Income Tax purposes is required to register for Employees’ Tax/PAYE within 14 days of them becoming an employer. The employer will then be required to withhold PAYE including Aids levy, from any remuneration paid or payable to the employees subject to observing the tax -free threshold as prescribed.
The Employee’s Tax is deducted in accordance with the tax tables availed by Zimra. The withheld tax should be remitted to Zimra on or before the 10th day following the month in which it was withheld.
Value Added Tax
Business operators (registered with Zimra) whose total annual value of taxable supplies in respect of Value Added Tax exceeds US$60 000 are required to register for VAT. After registration, the operator will then be required to charge VAT on all the taxable supplies. Any operator who is not registered for
VAT is not allowed at law to charge VAT.
VAT charged should be remitted to Zimra on or before the 25th day of the month following the month in which the tax was charged.
In addition to registration for VAT, registered operators whose annual turnover is US$240 000 or more are required to fiscalise. Fiscalisation refers to the use of approved electronic gadgets (fiscal devices) in recording VAT taxable transactions.
Withholding Tax on Contracts
A business operator who is registered with Zimra is required to withhold and remit to Zimra a 10 percent withholding tax from all amounts payable to persons whom he/she enters into contracts with unless the payee furnishes the registered operator with a Tax Clearance Certificate. The business operator should issue a tax certificate to the person from whom the tax has been withheld.
It should also be noted that any person who enters into a contract (whether for goods or services) of US$250 or more involving a single transaction or multiple transactions should comply with this legal requirement.
Where an SME who is not registered with Zimra or a registered SME who does not hold a valid Tax Clearance Certificate supplies goods or services, the person making payment to the SME is required to withhold 10 percent and remit the withheld amount to Zimra. In addition, the registered supplier should issue the SME from whom the tax has been withheld with a tax certificate to that effect.
The amount withheld should be remitted to the Commissioner-General of Zimra on or before the 10th day of the month following that in which the payment was made.
- Reminder: PAYE for the month of April 2013 is due on or before May 10, 2013.
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.
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