Zimra- Withholding Tax (WHT) in Zimbabwe

WHT is in terms Section 80 of the Income Tax Act (Chapter 23:06) and in terms of the same section, a 30% withholding tax is deductible from all amounts payable to all persons who enter into contracts without a valid tax clearance certificate (ITF 263). [Section 80 (2)]

This applies to persons who enter into contracts with the State or a statutory body, a quasi-Government institution and taxpayers who are registered with the Zimbabwe Revenue Authority.

Failure to withhold tax as mandated by the Act is an offense at law. It is important to register with ZIMRA and comply with the tax laws and obtain a valid tax clearance certificate to avoid the 30% WHT on contracts.

Where a trader has withheld any amount in terms of subsection (2) of the Act, he shall furnish the payee concerned with a certificate, in a form approved by the Commissioner, showing the amount so withheld. It is an offense to withhold tax and then fail to remit the tax so withheld to ZIMRA. Withholding tax returns therefore have to be filed and the tax withheld has to be remitted.

It is important to comply with WHT legislation as failure to do so has punitive implications. Sabarm is there to make sure that your company is compliant in all tax matters. The Sabarm Total Tax package is the solution to all your tax matters.

How to Change Company Name in Zimbabwe

Did you know that you can change your company if you no longer desire to use it for any reason. A company or private business corporation that wishes to change its name should first obtain the written approval from the Registrar. This is in terms of section 26 of the Companies and Other Business Entities Act Chapter [24:31]. The process is a bit lengthy but with the right professionals handling it for you its very easy. the following are the steps for changing the company name in terms of the Act.

Stages in change of company name

  1. Get written  approval from the registrar for the change of name
  2. The company  shall publish in the Gazette and in a daily newspaper circulating in the district in which the registered office of the company is situated an advertisement stating the change of name, and shall then apply for a certificate of change of name.
  3. The Registrar’s office  shall enter the new name in the register in place of the former name.
  4. Upon the application in writing of a registered business entity that has changed its name in terms of Section 26 of the Act and on production of the certificate of change of name, a Registrar of Deeds or mining commissioner, or other officer responsible for the registration of deeds or mining titles, shall make such alterations in his or her registers and on any title deeds and other documents evidencing title as may be necessary as a result of the changed name.

The change of company name does not affect any right or obligation of the registered business entity, or render defective any legal proceedings by or against the entity, and any legal proceedings that might have been continued or commenced by or against it under its former name may be continued or commenced under its new name. You therefore  do not lose any rights or property, neither can you evade your creditors by changing the name of the company.

 

 

 

Get Import Licenses in Zimbabwe

What is an Import license

An import license is a document issued by a national government authorizing the importation of certain goods into its territory. Import licenses are a statutory requirement in terms of the laws of Zimbabwe. However not all imports require an import licenses, for example goods classified as COVID 19  essential goods can be imported without an import license in terms of  Statutory Instrument number 90 of 2020.

Why do some goods require import licenses?

Imports are the main source of goods from outside the country and the reason why some goods require import licenses is to control the importation of goods. Such controls are done in the interest of the public and are meant to protect the consumer against things like dangerous and harmful drugs and substances and to protect the environment as well as to protect local businesses from foreign competition.

Requirements for an Import license

  • Certificate of incorporation
  • CR6 (Formerly CR14) showing company directors
  • Tax clearance certificate (ITF263)
  • Copy of standard development fund levy receipt
  • Proforma invoice for the imports

You do not have to smuggle your goods. Get in touch with Sabarm Business Solutions to day and let us help your business obtain an import license so that you can import your goods within the confines of the law.

 

NSSA Registration and NSSA Clearance certificates

What is NSSA?

In terms of the National Social Security Act [Chapter 17:04], NSSA contributions are compulsory and all employers must register within 30 days of becoming an employer, by completing employer registration form P2 and ensure that employees complete employee registration form P3.

Failure to comply with the provisions of the Act including failure to register is an offense and offenders will be prosecuted in terms of Section 48(1) and 48(5) where the penalties include a jail sentence.

NSSA pensions and other benefits

For NSSA pensions and other benefits, the employer and the employer both contribute 4.5% of the total earnings. This means that the total paid is 9% of the total earnings of the employee.

 

what is a NSSA Clearance Certificate?

A NSSA Clearance Certificate is a certificate issued by the National Social Security Authority [NSSA] to registered employers liable for NSSA contributions, under any of the Acts administered by the National Social Security Authority. The certificate is issued upon request from employers whose contribution accounts are up-to-date or has made alternative debt settlement arrangement with NSSA.

What are the benefits of NSSA Clearance Certificate?

  • NSSA Clearance Certificate is required when bidding for tenders.
  • It acts as an assurance that, the trading partner’s employees are adequately covered by social security schemes as enshrined under Section 12 of the Accident Prevention & Workers’ Compensation Scheme SI 68 of 1990.
  • A NSSA Clearance Certificate is a pre-requisite when applying for licences issued by local authorities.
  • Business counterparts have confidence in doing business with companies who are compliant to statutory obligations

What is required to obtain a NSSA Clearance Certificate?

  • The Employer’s account must be up-to-date in terms of contributions & premiums.
  • Employers with outstanding legacy debt, must make alternative debt settlement arrangement, approved by NSSA.
  • The Employer must furnish all statutory returns particularly P4 return or make satisfactory arrangements with NSSA for the furnishing of such returns.

Tax in farming for farmers in Zimbabwe

As farming is gaining prominence and more and more people are realizing the value of farming as a source of income and as a career its important to note that farming is a business and is recognized by the law as a trade.

What is a farmer?

For tax purposes a farmer is any person who derives income from pastoral/agricultural or other farming activities, including any person who derives income from the letting of a farm used for such purposes. [Section 2(1)  of the Income Tax Act] In terms of the law, such person is liable to pay tax. However not to fear, the tax laws are very soft towards farmers as they seek to promote farming in the country.

If you are a farmer as defined you must register with the Zimbabwe Revenue Authority (ZIMRA) and pay your taxes in terms of the Act.

what are the tax obligations of a farmer Obligations of a farmer?

  • Registering for Income Tax ,PAYE and VAT as and when you become liable to register
  • Keeping accurate records of transactions;
  • Retaining records for up to 6 years
  • Remitting taxes by the due dates;
  • Submitting tax returns by the due dates;
  • Furnishing information as requested by Zimbabwe Revenue Authority (ZIMRA

As mentioned earlier, the government is always seeking to promote agriculture. This is also evident in the tax laws passed which seek to promote farmers. Did you know that farmers have special deductions in terms of section 15 (2) (z) As read with paragraph 2 of the 7th Schedule of the Income tax Act? . These are specifically meant to make sure that the tax paid by farmers is minimized.

what are the special tax deductions for farmers?

  • Costs incurred in works for the prevention of soil erosion (planting of trees, ridging, etc.)
  • Any water conservation works
  • The stumping and clearing of land for farming purposes.
  • The sinking of boreholes and wells
  • Aerial and geophysical surveys.
  • Fencing used in farming operations.

Farming is also a business and like any other business, there are tax issues. Let us take care of the tax aspects of your farming business and you can focus on your farming. Contact us for more information.

 

Quarterly Payment dates – QPDs

Most people shy away from registering with ZIMRA for fear of paying taxes. In as much as businesses which are registered with ZIMRA are liable to pay taxes, it is important to note that it is the obligation of all businesses to pay taxes and failure to do so would be a breach of law in terms of the Income tax Act. Most people also have the misconception that once you are registered with ZIMRA you are now supposed to pay taxes whether you make a profit or not. Contrary to this widely accepted notion, that is not the case. Tax is charged on profits and therefore if you are not trading or if you are not making any profit there is no tax that is paid by your company.

Another misconception is that tax is paid all at once to ZIMRA. However this again is false. Did you know that tax is not paid all at once? Yes, contrary to most perceptions, tax is actually paid in bits as the year progresses. Tax is paid in percentages throughout the year on what are referred to as quarterly payment dates (QPDs).

What are QPDs?

QPDs are quarterly payment dates and these are the dates throughout the year on which tax is paid. Tax is paid provisionally and the provisional Tax payable is based on the respective estimated annual tax due. The ITF 12B form, which is a return for provisional tax payments, has to be completed in respect of these payments.
The quarterly payment dates and the percentage of tax due for each tax year are as follows.
1st QPD -25th March-10%
2nd QPD – 25th June -25%
3rd QPD- 25th September -30%
4th QPD-20th December -35%
Do not fear ZIMRA registration, stay compliant and avoid breaching the law. Contact Sabarm today and let us handle all the tax issues while you focus on running your business.

Is a Tax Invoice necessary in Zimbabwe?

Tax invoices are very important in Value added tax. However, not all receipts are tax invoices. A tax invoice is a legal document that a seller submits to a customer in which the tax is included. A registered operator who supplies taxable goods/services is required to issue the recipient with a tax invoice/fiscal tax invoice within 30 days from the date of such supply.

 

Did you know that it is illegal to issue more than one tax invoice for each taxable supply? If a customer loses the original tax invoice, the supplier may provide a copy clearly marked “copy”. Do not breach the law as the punishment is severe.
For VAT purposes, not all invoices will be accepted by the Zimbabwe Revenue Authority as tax invoices?
Features of a valid tax invoice.
  • The words ‘Tax Invoice’ or ‘Fiscal Tax Invoice’ should be in a prominent place
  • Name, address & VAT Reg No. of the supplier
  • Name & address of the recipient &, if recipient is a registered operator, the VAT Reg No. of the recipient Serialized number & date on which the invoice is issued
  • Description of the goods or services supplied
  • Quantity/volume of the goods or services supplied
  • Value of supply, price charged or consideration of the supply
  • Any other words/phrases used under the fiscal recording regulations denoting an invoice used to account for taxable supplies
It is an offence for an unregistered operator to charge VAT in respect of any supplies made. You cannot add a VAT component on your price of goods/services if you are not registered for VAT. Anyone involved in such unlawful activity will be prosecuted for such an offence.
VAT is seen as a complicated area in tax but we simplify it for you. Let us worry about it while you focus on your business. Contact us today for this and more

company re-registration in Zimbabwe

 

Debunking Company re-registration

Did you know that all companies registered before 22 February 2020 are required by law to be re-registered in line with the new Companies and Other Business Entities Act ?

what is required for company re-registration

For company re-registration, a company has to be up to date with its annual returns. Annual returns are a statutory obligation in terms of the companies and other business entities Act and are filed every year with the registrar’s office. These are not to be confused with tax returns which are filed with the Zimbabwe Revenue Authority.

 

 

Why you need Tax Clearance certificate (ITF 263)

What is a tax clearance certificate?

As explained by Zimbabwe Revenue Authority (ZIMRA), A Tax Clearance Certificate (ITF 263) is a certificate issued by the Commissioner General of the Zimbabwe Revenue Authority (ZIMRA), to a person liable to pay tax, provided that the taxpayer’s tax position is satisfactory.

How can you get a tax clearance?

First of all one has to be registered with ZIMRA for a tax clearance to be issued.  Moreover, for a tax clearance to be issued, one’s tax affairs have to be in order, i.e. tax returns & tax payments will have to be up to date and if the taxpayer is under a payment plan, it has to be adhered to religiously.

what is the importance of a tax clearance?

Most people think that you can trade and go about you business without a tax clearance. While this may be true, failure to have a valid tax clearance means that your tax affairs are not in order and you are in contravention of the country’s tax laws. It is a statutory requirement for all traders have a valid tax clearance and failure to provide a valid tax clearance means 10% Withholding tax has to be withheld on any contract with such a trader. This withholding tax of 10% is on each contract and is largely punitive and so it is far better to have your tax affairs in order and pay your corporate taxes rather than paying withholding tax on your contracts.

Most people think that you can trade and go about your business without a tax clearance. While this may be true, failure to have a valid tax clearance means that your tax affairs are not in order and you are in contravention of the country’s tax laws.

  • It is a statutory requirement for all traders have a valid tax clearance and failure to provide a valid tax clearance means 10% Withholding tax has to be withheld on any contract with such a trader in terms of section 80 of the Income Tax Act. This withholding tax of 10% is on each contract and is largely punitive and so it is far better to have your tax affairs in order and pay your corporate taxes rather than paying withholding tax on your contracts.
  • A tax clearance is a requirement for the issuance and renewal of any operator’s licence in respect of the operation of any public service vehicle [Section 80A (2)]
  • A tax clearance is a requirement for the issuance and renewal of a licence in respect of any trade or business required to be licensed in terms of the Shop Licences Act [Chapter 14:17]
  • A tax clearance is a requirement for the issuance and renewal of a certificate of registration of a mining location under the Mines and Minerals Act [Chapter 21:05] to a miner.
  • A tax clearance is a requirement for the issuance and renewal of a licence to any person who owns, conducts or operates a designated tourist facility as defined in the Tourism Act [Chapter 14:20] or who provides or assists in providing any service which is such a designated tourist facility.

Avoid  the hassles associated with not having a valid tax clearance certificate. Contact Sabarm Today and let us give you peace of mind on all your tax issues.

 

 

 

Value Added Tax (VAT)

What is Value added Tax (VAT)?

Value added Tax (VAT) is a consumption tax that is assessed on products at each stage of the production process from labor and raw materials to the sale of the final product.

Output tax and input tax

Output tax is the VAT charged on the sale of goods &/services from your business, if its VAT-registered. Input tax is the VAT charged on the sale of goods & or services to your business, if its VAT-registered. VAT is calculated as the difference between the Output tax and the input tax.

Who is supposed to register for VAT?

It is not every business that is supposed to be registered for VAT. A trader is mandated to register for VAT if the value of taxable supplies exceeds or is expected to exceed the VAT threshold (ZWL $1 000 000) within a period of 12 months. Whenever the business reaches or anticipates to reach or exceed this threshold, it should register for VAT without fail or risk mandatory VAT registration which is normally punitive in nature due to backdating.

The requirements for VAT registration

For all VAT registration contact Sabarm today and get professional assistance at your convenience. The following are the requirements for VAT registration.