|Presumptive tax is levied in accordance with the Twenty-Sixth Schedule to the Income Tax Act [Chapter 23:06]. It is charged based on the presumed income of those persons engaging in any of the trades, occupations or undertakings.
Presumptive Tax was introduced to broaden the revenue base in view of the increase in informal business activities. Selected sectors of the economy were targeted to ensure the participation of informal businesses in tax payment in line with experiences of other developing countries.
The presumptive Tax rates were reviewed downwards with effect from 1 January 2017 and are now payable monthly.
Who is Liable to Pay and rates of presumptive tax?
Every operator of a hairdressing salon is required to pay Presumptive Tax amounting to US$10.00 per chair per month.
The full amount should be paid by the 20th day after the end of the quarter. Amounts not paid by the due date are subject to interest charges.
2. Informal Traders
All persons in receipt of rental income from an informal trader in respect of residential accommodation, premises or a place on which trade is carried on are required to recover an additional amount by way of Presumptive Tax equal to10% of the rent and this also includes local authorities.
The amount should be remitted to ZIMRA within 30 days from the date the amount is recovered. Failure to recover or remit the Presumptive Tax renders the lessor personally liable for the payment of the Presumptive Tax and a penalty of 100% of the amount due. Failure or refusal on the part of the informal trader to pay the Presumptive Tax constitutes a breach of the lease and allows the lessor to terminate the lease without notice.
3. Small-Scale Miners
With effect from 1st October 2014 Small Scale Miners Presumptive tax was reduced from 2% of the gross amount payable to 0%. Therefore no Presumptive tax will be collected from Small Scale Miners.
Cross border traders who import commercial goods into Zimbabwe are required to pay a Presumptive Tax equal to 10% of the value for duty purposes (VDP) of the commercial goods. The only exception are cases where the trader is registered with ZIMRA for Income Tax purposes and has a current tax clearance certificate (ITF263).
Every operator of a restaurant or bottle store is required to pay Presumptive Tax amounting to US$70 per month.
The full amount should have to be remitted to ZMRA by the 10th day after the end of the quarter. Interest is chargeable on all amounts not paid by the due date.
Every person who owns, is in charge of a cottage industry regardless of it being licensed, or not is required to pay Presumptive Tax amounting to US$70 per month. Cottage industry operators include those in the furniture making or upholstery trade, metal fabrication and any other cottage industry that the Minister may, by notice in a statutory instrument, prescribe.
The full amount should have to be remitted by the 10th day after the end of the quarter. Interest is chargeable where the amounts due are not paid by the due date.
Presumptive Tax is charged to operators of commercial waterborne vessels used for the carriage of passengers for profit and fishing rigs. The full amount of presumptive tax shall be remitted by the 10th day after the end of each quarter, however operators can still remit on monthly basis. The rates are shown in the table below.
Presumptive tax is charged to operators of Taxi Cabs, Omnibus, and Goods carrying vehicles and driving schools. The rates were reduced in 2017 and the full amount of presumptive tax shall be remitted by the 10th day after the end of each quarter, however operators can still remit on monthly basis. The rates of each type of vehicles can be obtained on the ZIMRA website.
Reminder for payment of tax
Our valued clients are reminded that the Value Added Tax for the month of March 2018 is due on or before 25 April 2018 and that Tax Amnesty applications are open until 30 June 2018.