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Understanding Tax Clearance Certificate and Obligation to Withhold Tax



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Simplified Guide to Taxes 2015 low resIn terms of Section 80 of the Income Tax Act (Chapter: 23:06), a 10% withholding tax is deductible from all amounts payable to all persons who sell any goods and service to the State or a statutory body, a quasi-government institution and all firms and organizations who are registered with the Zimbabwe Revenue Authority (ZIMRA).

Unless a payee furnishes the paying officer with a tax clearance certificate, any person who enters into a contract (whether for goods or services) of US$250 and more involving a single transaction or multiple transactions should comply with this legal requirement.

The amount withheld should be remitted to ZIMRA on or before the 10th day of the month following that in which the payment was made. The payment should be accompanied with a schedule showing all names of the persons from whom the 10% was deducted and attached to the prescribed form (Rev 5 form) and submitted to ZIMRA.

Any paying officer, who has withheld any amount, should furnish the payee concerned with a certificate, in a form approved by ZIMRA and should clearly show the amount withheld. The Commissioner General of ZIMRA is supposed to retain any amount remitted to him until the income tax payable by the payee, for that year of assessment has been assessed.

The amount is normally allowed as a credit against the income tax payable by the payee. Where the amount exceeds the income tax so payable by the payee, the

ZIMRA will refund the excess to the payee or it may be set off against other tax liabilities.

Any person who fails to deduct the 10% withholding tax is liable for the payment of the amount due and a 100% penalty is chargeable on the amount due.

Exceptions to the Requirement to Withhold the 10%

The exceptions include the following:

  • Amount paid in terms of an employment contract.
  • Sales affected in any shop in the ordinary course of the business of the shop. This caters for sales by retailers or wholesalers to consumers.
  • Payments for the supply of farm produce and livestock by farmers.

If you need to understand the current tax system, how your business is affected and avoid unnecessary penalties, get yourself a copy of the 2015 SIMPLIFIED GUIDE TO TAXES from BusinessLink, phone or whatsapp 0777 774 007, or come to our office at 3rd Floor Merchant House, 2nd St / Robson Manyika Av, Harare. Price only $3 for soft copy and $6 for a hard copy.

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