Voluntary tax compliance explained

VOLUNTARY compliance refers to the extent to which a taxpayer prepares and file returns without the involvement of or without being forced to do so by the Zimbabwe Revenue Authority (ZIMRA), thereby, fulfilling all the tax obligations under the Income Tax Act, Value Added Tax Act, Capital Gains Tax Act and the Finance Act.

Tax compliance is driven by the willingness of a taxpayer who understands their tax obligations and the importance of paying taxes in building the nation.

Importance of paying taxes

It enables the Government to:

◆ Look after its own citizens

◆ Citizens benefit from social services such as medical care

◆ Provision of national service such as payment of civil service salaries

◆ Infrastructure development and maintenance

◆ Provision of education services

◆ It cultivates the trust and the spirit of teamwork between taxpayers and the tax authority. Tax payers can be tax compliant by:

◆ Registration of trade

◆ Submission of returns

◆ Payment of Taxes

◆ Declaration of Income

◆ Record keeping

Registration of trade

What is trade?

In terms of Section 2 of the Income Tax Act (Chapter 23:06) trade is defined as any profession, trade, business, activity, calling, occupation or venture, including the letting of any property, carried on, engaged in or followed for the purposes of producing income and anything done for the purpose of producing such income.

Registration

Section 42 of the Income Tax Act, provides that, every company shall file with the Commissioner a copy of the memorandum and articles of association constituting the company within thirty days of its incorporation or registration under any law. The amendments to the memorandum and articles of association constituting the company are also to be submitted to ZIMRA within thirty days of the making of any such amendment.

Section 23 of the Value Added Tax Act (Chapter 23:12) provides that taxpayers are expected to register for VAT when they reach the annual threshold of $1,000,000.00. Registration with ZIMRA is mainly done online through the E-Services platform, https://efiling.zimra.co.zw/. It can also be done by completing the REV 1 form obtainable from the ZIMRA website, on the link https://www.zimra. co.zw/downloads/category/9-domestic-taxes#. The completed REV 1 form, together with its attachments should be scanned and submitted through emails obtained from the ZIMRA website (Public Notice No 22 of 2020).

Submission of Tax Returns

In terms of Section 37 of the Income Tax Act (Chapter 23:06) and Section 28 of the Value Added Tax Act (Chapter 23:12), registered taxpayers are obliged to file a correct tax return, on or before the due date through the use of E services platform. Where E services platform fails, the failed tax returns may be scanned, and sent to respective offices using e-mail addresses published on Public Notice No 22 of 2020 on the ZIMRA website.

It is important to note that, tax returns must be submitted as long as the taxpayer is registered with ZIMRA. This means that, every taxpayer who is on the ZIMRA system whether dormant or active should submit tax returns for all the tax periods including prior years (if not submitted).

Payment of taxes

It is the taxpayer’s obligation to pay taxes in full when they become due and payable. If the amount payable cannot be cleared by due date, such clients should approach the nearest ZIMRA office and negotiate for a payment plan. Late payments affect the compliance status of the business entity.

Declaration of taxable Income

In terms of Section 37A, of the Income Tax Act, taxpayers are expected to do a self-assessment and submit their returns to ZIMRA. The return of income made shall be a full and true return for the whole period of twelve months ending on the last day of that year of assessment. The taxpayer therefore, has an obligation to correctly declare taxable income in their returns.

My Taxes, My Duties: Building my Zimbabwe!! 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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