In Zimbabwe, people and companies who earn income (excluding employee income) need to pay taxes in advance on a quarterly basis.
These payments, called Quarterly Payment Dates (QPDs), are due on March 25, June 25, September 25 and December 20.
The percentage of the estimated annual tax liability to be paid on each date is 10 percent, 25 percent, 30 percent and 35 percent respectively.
It's important to estimate the tax liability accurately and make payments accordingly.
QPDs apply to sole traders, independent contractors, partners, non-executive directors, trusts, and companies.
Employees, individuals earning property or insurance commission, and those exempt from tax are not required to make QPDs.
If someone's financial year ends on a date other than December 31, they still need to pay on the specified QPDS unless they have received permission to use different payment dates from the Commissioner.
Taxpayers must make sure their tax liability estimates are correct.
The Commissioner has the right to question the estimate and if unsatisfied, can make their estimate, which becomes final and conclusive.
If a taxpayer disagrees with the Commissioner's estimate, they have the right to object or appeal. If a QPD is not paid on time or is under-reported, interest will be charged.
However, the Commissioner can waive or reduce the interest if the under-reporting is within a 10 percent margin of error or if the taxpayer had genuine difficulties paying the provisional tax.
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Provisional tax is not the final tax amount. Once the actual tax liability is determined, the Commissioner will offset any provisional tax paid against the actual tax owed.
If there is an overpayment, it will be used to cover other tax obligations. If no other obligations exist, the excess amount will be refunded to the taxpayer.
The Reserve Bank of Zimbabwe governor has announced a new payment arrangement for the second quarter QPD.
Now, taxpayers will pay 50 percent in Zimbabwe Gold (ZiG) and 50 percent in United States dollars (USD).
This dual-currency approach aims to provide more flexibility and convenience.
Taxpayers must now submit their QPD returns through the new Tax and Revenue Management System (TaRMS) platform introduced by ZIMRA.
It is advised to submit the ZIG and US dollar portions as a single combined return, instead of separating them. QPD payments will be processed through the ZIMRA single account, eliminating the need for taxpayers to specify the tax type during payments.
For taxpayers facing financial challenges, ZIMRA has introduced the option to apply for a payment plan through the TaRMS system.
This flexibility aims to help taxpayers manage their financial obligations effectively.
The current income tax rate is 25 percent, plus an additional 3 percent AIDS Levy. Taxpayers should keep these updated rates in mind when calculating their tax liabilities.
Simbarashe Hamudi is a tax partner at Baker Tilly. He can be contacted at simbarashe.hamudi@ bakertilly.co.zw / +263 775 399 536.
