07/03/2022
TAX REGISTRATION
People often ask me, should l register my hustle? Should l register a Company and register the Company for tax? Should l register as an individual in trade rather? Should l even be registered? Well this article discuses who is eligible to register for tax, how to register, registration requirements, when to register, tax heads to register for, registration costs, penalties for non-compliance and remedies thereof.
Companies-
The law states that companies should register for tax preferably within 30 days from date of Incorporation. There are two ways to register, that is, Manual Registration or Electronic Registration on the ZIMRA e-services portal http://efiling.zimra.co.zw/Pages/Registration. For Manual Registration, the Directors of the company in their own capacity, should approach ZIMRA offices and apply for registration. Documents required are:
• Company Documents (Certified)
• Company Stamped Bank Statement
• Letter appointing Public Officer, his/her Identity Card and his/her stamped Bank Statement
• Documents for at least 2 Directors – Identity Card, Proof of residence in form of utility bills, support with affidavit if bill is not in your name.
For electronic registration, the documents stated above should be scanned and simply attached on the authority’s e-services portal.
Individuals in Trade-
Individuals in Trade are people who are in business in their own capacity trading as individuals. Examples are celebrities, professionals trading in their own capacity like Lawyers, landlords with multiple properties, Doctors, Engineers etc. Individuals should preferably register for tax within 30 days of starting to trade.
One can choose to trade as an individual or to open a company. The advantage of trading as a Company is limited liability. In the unfortunate event of insolvency, you owing more than you own, creditors can only attach company property to settle Owings. For individuals, creditors can attach personal property to settle debts.
Which Tax heads should l be registered for?
Often people are just concerned about being registered and getting their tax clearance. But which tax heads should l be registered for?
The following are some of the types of tax that you can be registered for:
• Income tax – tax levied on business income for individuals or companies or any other entities and it varies with their respective income or profits (taxable income). Registered for by every Company or Individual in Trade. Tax paid on PROFIT, should the business incur a loss, no tax will be paid.
• PAYE (Employee tax) - a withholding tax charged on salaries (income) payable to employees. To be registered for if you have employees.
• Value Added Tax- is an indirect tax on consumption, charged on the supply of taxable goods and services. It is levied on transactions rather than directly on income or profit, and is also levied on the importation of goods and services. To be registered for by every business which reasonably expects to generate sales of ZWL $7,800,000.00 or US$60,000.00 per annum.
• Presumptive tax (informal trader’s tax) – fixed rate of tax chargeable to selected sectors within the economy such as hair salons, bottle store owners etc.
• Capital Gains Tax- paid when a person/ company sells an immovable property or marketable securities.
• Withholding taxes- paid by the payer and may or may not be a final tax
Registration Costs-
Good news is registering for Tax is FREE!! . However, should you choose to have your registration facilitated by consultants, they will charge consultancy fees.
Penalties for Non-compliance-
Should a company or individual fail to comply, ZIMRA compulsorily register your enterprise, determine your effective date of registration (EDR), and calculate the taxes which should have been paid and penalties/interest thereof. If you are not registered your enterprise won’t have a tax clearance. This means that for every invoice you issue to your clients, you will only get 70% of the total invoice amount. 30% of the total invoice amount will be withheld.
The only remedy available is to simply register. Should you have any questions or need assistance to register for tax, contact us today.
