Withholding tax on payments to non-resident artistes or entertainers

Who is a non-resident artiste or entertainer?

This is a foreign person who visits Zimbabwe with the intention of carrying on a trade for a limited period of time. The trade is usually that of a professional sports person, musician, performer, actor, dancer, comedian and any other trades of similar description.

Who is required to withhold the tax?

Any person who enters into a contract with a foreign artist or entertainer is required by Section 80B of the Income Tax Act [Chapter 23:06] to withhold tax on any payment made to the foreign artist or entertainer.

This is usually the resident contractor or promoter who arranges or promotes the event and pays remuneration to the non-resident artiste and is referred to as the withholding agent in the Act.

The withholding agent is any person who is employed by the State or by a quasi-Governmental institution or contractor or registered taxpayer and is responsible for making a payment to a non-resident artiste or entertainer of any amount that is due in terms of a contract.

Definition of payment

Payment is defined as payment by cash, barter, set-off, crediting a director’s loan accounts, inter-company debits and credits or by any other settlement of obligations whatsoever and in any form.

Obligations of the withholding agent

◆ To withhold 15 percent of each amount payable to the payee under the contract concerned. ◆ To pay each withheld amount to the Commissioner on or before the 10th day of the month following that in which payment was made. To submit returns (Rev 5 Form) of the amounts withheld. To take all reasonable steps to ensure that the non-resident artiste or entertainer with whom the contract is concluded, is made aware of these provisions. To issue a certificate to the payee showing the amount withheld. Responsibility of remitting the tax if the contractor or promoter is

a non-resident Where a non-resident contractor or promoter pays remuneration to non-resident entertainers or artistes, the entertainers and artistes are directly responsible for paying the tax to Zimra.

It is a requirement that a foreign artiste or entertainer gets a tax clearance letter from Zimra before performing in Zimbabwe.

Requirements to get a foreign artiste clearance letter

The promoter of a foreign artiste or entertainer is required to make an application for a tax clearance to Zimra, with the following attachments: ◆ Clearance letter from the National Arts Council of Zimbabwe Copies of the current passport of the foreign artiste Signed contract between the promoter and foreign artiste or entertainer Payment details and proof of payment made to the artiste by the promoter if already paid

Calculation of Withholding Tax and payment to Zimra

◆ Zimra will compute 15 percent Withholding Tax payable by the foreign artiste or entertainer based on the fees in the contract, regardless of whether the promoter has paid the foreign artiste the full amount or not. Zimra issues to the promoter a computation of Withholding Tax which will be used to make payment to the Zimra Commissioner General’s bank account. ◆ The promoter is required to submit Withholding Tax Return (Rev 5) and proof of payment to Zimra. ◆ Zimra will issue the foreign artiste

with a clearance letter. A withholding agent who fails to withhold the tax and/or pay to Zimra, on behalf of the non-resident artiste or entertainer will be held personally liable for the tax that should have been paid to the Commissioner General of ZIMRA and in addition, a 100 percent penalty is also chargeable on the amount due.

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.