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Tax Obligations for Start-Ups in Zimbabwe

As an entrepreneur starting a business in Zimbabwe, it’s crucial to understand and comply with the various tax obligations. Failing to meet these requirements can lead to penalties and legal issues. Here is an overview of the key taxes start-ups need to be aware of.

CORPORATE INCOME TAX

  • The standard corporate income tax rate in Zimbabwe is 24% on taxable income, plus a 3% AIDS levy, for an effective rate of 24.72%.
  • This applies to resident companies and permanent establishments of foreign companies operating in Zimbabwe.
  • Certain sectors like manufacturing, tourism, and agriculture may qualify for reduced rates.

VALUE ADDED TAX (VAT)

  • Businesses that make taxable supplies exceeding USD $4,800,000 annually must register for VAT.
  • The standard VAT rate is 14.5%. Some goods and services may be exempt or have reduced rates.
  • Registered operators must submit VAT returns and payments by the 25th of the month following the tax period.

PAY AS YOU EARN (PAYE)

  • Employers must withhold income tax (PAYE) from employees' salaries and remit it to the Zimbabwe Revenue Authority (ZIMRA).
  • The employer can access relevant tax deduction tables and obligations on the ZIMRA website.

WITHHOLDING TAX

  • Certain payments to non-residents, like dividends, interest, royalties, and technical fees, are subject to withholding tax.
  • Rates range from 10-15% depending on the type of payment.

CAPITAL GAINS TAX

  • Capital gains from the sale of specified assets like real estate and shares are taxed at 20% for companies and 5% for individuals.

PRESUMPTIVE TAX

  • Small businesses and informal traders may be subject to presumptive tax, a simplified tax based on the size and nature of the business.

OTHER OBLIGATIONS

  • Businesses must register with ZIMRA and obtain a Business Partner Number (BPN) used for all tax transactions.
  • Keep all accounting records for at least 6 years.
  • Observe requirements for contracts exceeding ZWL $80,000, including a 10% withholding.

It’s important for start-ups to consult with qualified tax professionals to ensure full compliance. The Zimbabwe Revenue Authority (ZIMRA) website also provides comprehensive information, forms, and contacts for any tax queries.

By understanding and fulfilling these tax obligations from the start, entrepreneurs can avoid costly mistakes and contribute to Zimbabwe’s economic growth.