Tax and Customs Requirements For New Businesses

One of the best ways of ensuring success and continuity in any business is to ensure that all statutory obligations are met in time. This article seeks to alert our valued clients who are about to start new business ventures on some of the basic requirements relating to tax and customs legislation.

Income Tax

  • All clients, including individuals, companies, partnerships and cooperatives who want to venture into any business venture are required to register with ZIMRA and comply with all obligations as stipulated in the legislation. To register, you are required to have a bank account among other requirements.
  • Once you have a bank account, you can then approach ZIMRA for registration. You will be required to complete registration forms depending on the nature of your business operations. All clients will be required to complete the REV 1 form, which can be obtained from ZIMRA offices or can be downloaded from this website. Once registered, you will be issued with a Business Partner Number (BP) which acts as the business’ identification number and is used for all transactions with ZIMRA, including remittances of tax.
    • After commencing operations, you are required to keep records of all your business operations and pay Provisional Tax on the stipulated dates (as shown below). The dates are referred to as Quarterly Payment Dates (QPDs). The Provisional Tax payable is based on the respective percentage of estimated annual tax due. The annual estimated tax due should be revised to update the estimate every quarter.
    • The form ITF 12B, which is a return for provisional tax payments, has to be completed in respect of these payments.
    • The payment dates and the percentage of tax due for each tax year are listed below:

QPD

Due Date
(on or before)

Installment Due
(as a % of the annual tax payable)

1st QPD


25th March

10%


2nd QPD

25th June

25%

3rd QPD


25th September

30%

4th QPD

20th December

35%

 

• Some businesses, operators are required to pay Presumptive Taxes and this includes operators of omnibuses, taxi-cabs, driving schools, goods vehicles, hairdressing salons, informal traders, operators of restaurants or bottle stores, small scale miners,  cottage industry operators  ,operators of commercial waterborne vessels used for the carriage of passengers for profit and fishing rigs.

• A tax return is required after the end of each tax year. The tax year runs from 1 January to 31 December of each year. Clients who have been specified in terms of Section 37A of the Income Tax Act [Chapter 23:06] as being on Self-Assessment are required to furnish Self-Assessment Returns in duplicate by 30th April of the following year.
• Operators will also require a Tax Clearance Certificate - form ITF 263 which is issued by ZIMRA once you have met all the stipulated obligations which include submission of tax returns and remittances of tax due. If you do not have this clearance, anyone who pays you any amounts in excess of US$250.00 are required to withhold and remit to ZIMRA 10% of the amounts paid.
• There is need to strictly observe the requirements in Section 80 of the Income Tax Act [Chapter 23:06]. It requires that all registered business taxpayers who enter into any contracts which result in an obligation to pay any amounts whose total or aggregate is US$250.00 or more to withhold 10% of each amount payable to payees who fail to furnish valid tax clearance certificates.


Value Added Tax (VAT)

  • Any person who carries on trade in taxable supplies and whose annual taxable turnover exceeds or is likely to exceed US$60 000.00 must apply to register for VAT on Form VAT1.
    Responsibilities upon registration include:
  • Keeping accounting records for a period of at least six (6) years after the tax period to which the period relates.
  • Completing and submitting VAT returns even if you do not owe ZIMRA. ZIMRA will advise you of the frequency of submitting the returns though most clients submit returns either monthly or after every two months.
  • Calculating and remitting the VAT due to the Commissioner on or before the due date.
  • With effect from 1st January 2012, the due date for the submission of VAT returns and payment has been extended from the 20th to the 25th of the month following the end of the tax period.
  • Issuing tax invoices for any taxable supply whose value is more than US$10.00.
  • Record transactions electronically. With effect from 1st of October 2011, all registered operators are also expected to comply with fiscalisation regulations .This is a requirement where registered operators under category “C” and whose annual turnover exceed US$240 000.00 are expected to record transactions electronically.
  • Advising ZIMRA of any change in business details, including address, addition of/or change of partner, cessation of trade, etc.
  • Allowing ZIMRA officials to enter your business premises and examine goods and all business records.

 

PAYE

  • Every business person who becomes an employer is required to apply to the Commissioner General for registration within 14 days of becoming an employer.
  • The employer will be given the relevant tax deduction tables and informed of his/her obligations as an employer.
    Some of the obligations include:
  • Calculation and deduction of PAYE in accordance with the tax deduction tables
  • Remittance of PAYE to ZIMRA within 10 days after the end of the month during which the amount was withheld. Please note that with effect from 1st September 2010, the remittance of PAYE was moved from within 10 days after the end of the month during which the amount was withheld.
  • Keeping accounting records for a period of at least six (6) years.
  • Submission of the ITF 16 return which contains details on annual earnings, deductions, credits and PAYE for each employee within 30 days after the end of the year.
  • You will note that failure to withhold any amounts which you are required to withhold renders you liable to the amounts due as well as penalties and interest. Observing these basic requirements will assist you in running your business professionally and helps avoid the anxiety and stress associated with noncompliance and having to pay arrears, interest, fines and penalties.

 

PAYE tables are available on this website

Customs and Excise
• In the event that you intend to import goods, you are still required to have registered with ZIMRA so that you have the BP number that will identify you as an importer. You will need a clearing agent approved and registered with ZIMRA to handle your importations or you may register with ZIMRA to do your own clearances.
• For exports, you will also need an agent to handle the exports or register on your own with ZIMRA. 
• You are required to keep reasonable and proper records and books of accounts for all transactions and maintain records of all the bills of entry, bills of lading, rail notes, invoices and all other documents required to be accounted for in terms of the Customs and Excise Act. Retain all records for at least six (6) years.

 
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