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Section 80 of the Income Tax Act (Chapter: 23:06) provides for the deduction of 10 percent Withholding Tax from all amounts payable to all persons who enter into contracts with the State or a statutory body, a quasi-Government institution and taxpayers who are registered with the Zimbabwe Revenue Authority (Zimra), unless a payee furnishes the paying officer with a valid Tax Clearance Certificate.

What does a “Contract” mean?

“Contract” means an agreement in terms of which the State or a statutory body, quasi-governmental institution or registered taxpayer is obliged to pay one or more persons an amount or amounts totalling or aggregating US$1 000 or more.

When is the amount withheld remitted to Zimra?

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.

The payment should be accompanied by a schedule showing all names of the persons from whom the 10 percent was deducted and attached to the prescribed form (Rev 5) and submitted to Zimra.

Withholding Tax Certificates

Any paying officer who has withheld any amount, should furnish the payee concerned with a Withholding Tax Certificate.

The format of the certificate should be in a form approved by the Commissioner General of Zimra, and should clearly show the gross amount withheld.

Crediting of Withholding Taxes

The Commissioner General of Zimra retains any withholding amount remitted to him until the Income Tax payable by the payee for the year of assessment has been assessed.

The amount shall be 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 Commissioner General of Zimra will refund the excess to the payee or may be set off against other tax liabilities.

Failure to Withhold 10 percent Tax

If a statutory body, quasi-governmental institution or registered taxpayer fails to withhold or to pay the Commissioner General of Zimra the amount required to be withheld from a payee, the statutory body, quasi-Governmental institution or registered taxpayer will be liable for the payment not later than the date on which payment should have been made if the amount had been withheld.

Where a statutory body, quasi-Government institution or registered taxpayer pays to the Commissioner General of Zimra the amount for failure to pay any amount required to be withheld from a payee, it shall have the right, within 24 months from the date on which payment should have been made, if the amount had been withheld, to recover the amount from the payee.

The statutory, quasi — Government institution or registered taxpayer concerned is not entitled to recover from the payee any penalty and interest charged for failure to withhold.

Occurrences where 10 percent Withholding Tax cannot be withheld:

Persons with a valid Tax Clearance Certificate;

Sale effected in any shop in the ordinary course of the business of such shop, or any other consumer contract for the sale or supply of goods or services or both in which the seller or supplier is dealing in the course of business and the purchaser or user is not;

Amount paid in terms of an employment contract

An agreement for the settlement of a delictual claim against the State or a statutory corporation;

Payments for the supply of farm produce and livestock by farmers.

Reminder for Payment of Tax

Our valued clients are reminded that the PAYE for the month of September 2016 is due on or before 10thOctober2016.

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.

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