Tax con­ces­sions, obli­ga­tions for SMEs

Chronicle (Zimbabwe) - - Business -

SMALL-TO-MEDIUM en­ter­prises (SMEs) can ben­e­fit from a num­ber of tax con­ces­sions which are meant to fa­cil­i­tate their growth.

One such ben­e­fit is the Spe­cial Ini­tial Al­lowance (SIA). SMEs reg­is­tered for In­come Tax pur­poses 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. It is al­lowed over a pe­riod of three years, 50 per­cent dur­ing the first year and 25 per­cent in each of the next two years of as­sess­ment.

Tax obli­ga­tions The op­er­a­tion of SMEs may give rise to obli­ga­tions for any, or all of the fol­low­ing taxes: Pre­sump­tive Tax, In­come Tax, Value Added Tax (VAT), Pay As You Earn (PAYE) and With­hold­ing Tax. Reg­is­tra­tion and pay­ment of tax

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 of tax­pay­ers in­clude cross-bor­der traders, fur­ni­ture mak­ing traders, trans­port op­er­a­tors, smallscale min­ers, res­tau­rant op­er­a­tors, flea mar­ket op­er­a­tors and small min­ers, among oth­ers.

Th­ese op­er­a­tors are re­quired to pay Pre­sump­tive Tax each quar­ter on the 10th of the fol­low­ing months: Jan­uary, April, July and Oc­to­ber. In­come Tax Ev­ery busi­ness op­er­a­tor who is not el­i­gi­ble to pay Pre­sump­tive Tax is re­quired to reg­is­ter for In­come Tax pur­poses with the Zimbabwe Rev­enue Au­thor­ity (Zimra) and com­ply with statu­tory re­quire­ments re­gard­ing the sub­mis­sion of re­turns and pay­ment of taxes. A com­pany is re­quired to fur­nish Zimra with its mem­o­ran­dum and ar­ti­cles of as­so­ci­a­tion within 30 days of in­cor­po­ra­tion. In ad­di­tion, the com­pany is also re­quired to nom­i­nate a Pub­lic Of­fi­cer through whom all the cor­re­spon­dence with Zimra is chan­nelled. The tax rate on tax­able in­come is cur­rently at 25 per­cent plus 3 per­cent Aids Levy for com­pa­nies and in­di­vid­u­als in trade.

PAYE Ev­ery per­son who be­comes an em­ployer is re­quired to reg­is­ter for PAYE within 14 days of them be­com­ing an em­ployer.

The em­ployer will then be re­quired to with­hold Em­ploy­ees’ Tax, in­clud­ing Aids Levy, from any re­mu­ner­a­tion paid or payable to the em­ploy­ees, sub­ject to ob­serv­ing the tax-free thresh­old nor­mally pre­scribed. PAYE 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.

VAT Busi­ness op­er­a­tors (reg­is­tered with Zimra) whose to­tal an­nual value of tax­able sup­plies in re­spect of VAT ex­ceeds $60 000 are re­quired to reg­is­ter for Value Added Tax. 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.

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 con­cludes con­tracts with, un­less the payee fur­nishes the reg­is­tered op­er­a­tor with a Tax Clear­ance Cer­tifi­cate. The busi­ness op­er­a­tor should is­sue a cer­tifi­cate con­firm­ing amount with­held to the per­son from whom the tax has been de­ducted.

Any per­son who con­cludes a con­tract (whether for goods or ser­vices) to­talling $1 000 or more per year 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 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.

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.

Please tune in to Zi-FM Stereo ev­ery Wed­nes­day from 1930-2030 hours for dis­cus­sions on Cus­toms and Tax mat­ters.

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