Everyone who has been in business for sometime has had to add a few words to their vocabulary. One of those words is tax clearance. There are several types of tax clearances available but this article will focus only on ITF263 for income and employee tax.
What is a tax clearance or ITF263?
A tax clearance certificate is a document that is issued by the Commissioner General of the Zimbabwe Revenue Authority (ZIMRA) to a person liable to pay tax under any of the Acts administered by ZIMRA. The certificate is issued upon request to a person whose tax affairs are up-to-date or has made satisfactory tax compliance arrangements with ZIMRA.
Benefits of a tax clearance?
Tax clearance does not necessarily offer a direct benefit. It is usually needed as a requirement for doing business with other companies. There are certain situations in which your business may need tax clearance and some benefits a tax clearance certificate may give your business:
- To participate in government tenders (almost all governement tenders require a valid tax clearance as a condition).
- To participate in public tenders (this is mostly because tax registered companies prefer to do business with other tax registered companies).
- To prove that you are tax compliant (a tax clearance certificate is proof that you are paying taxes or are putting your tax issues in order).
- To avoid the 10% withholding fee (tax registered companies are required by law to withhold 10% from any company that does not have a valid tax clearance. This is levied only on order amounts above $250 during any tax year).
Who qualifies for a tax clearance?
Tax clearance is available for anyone who is liable pay any form of tax to ZIMRA. This includes both individuals and companies.
- Individuals or companies that have paid or submitted tax returns.
- Newly registered companies that want to trade with tax clearance requiring businesses but have not yet paid tax to ZIMRA.
Requirements for tax clearance in Zimbabwe
The requirements for obtaining a tax clearance in Zimbabwe are as follows:
- Certified copies of company papers.
- Certified copies of directors’ IDs.
- Proof of residence for every director (attach affidavit if proof is not in director’s name).
- Directors’ email addresses and phone numbers.
- Current bank statement of the company.
- Current personal bank statement of one of the directors.
- A budget of $50 – 150 if done through this website.
Procedure for getting a tax clearance certificate
The procedure for obtaining tax clearance in Zimbabwe is as follows:
Option 1 (easy method): Get a tax consultant to do it for you.
Option 2 (a bit more complicated): Register with ZIMRA, submit all required documentation and apply for the tax clearance certificate.
Does a PBC pay tax and lets say if for the whole month i dont have any clients will i still be required to pay tax
A PBC pays tax Owen. For income tax it’s 25% of profit. So if you make zero profit you still calculate 25% of 0. You may need to consult with a tax accountant for more information on this.
Hi Angel and Walt, thank you for the abundance of information, is a start-up required to have tax clearance and pay tax even when just starting out or is there a window?
You are welcome Lillian. Tax clearance is not an obligation as such although you may need it in order to enjoy the benefits listed in the article above. Payment of taxes is a legal requirement in Zimbabwe. Income tax is paid quarterly to ZIMRA as a percentage of your profit. The next due date should be 25 September. The good thing is that if you haven’t started trading or making a profit then you won’t pay tax. You only do so when you make a profit. The other tax is employee tax also known as PAYE (pay as you earn). This is paid by the employee to ZIMRA but the employer withholds the tax from any salary above $300 and submits the money on behalf of the employee to ZIMRA.
how do I get tax clearance online
Hi Dairai, just follow the ‘Procedure for getting a tax clearance certificate
‘ outlined above
what are the percentages?
That will be 25% of profit for income tax
thank you for your help.my question is,can i get tax clearance without any bank statement.lets say i haven’t started running the business? because you said you need a business bank statement.
You cannot, a bank statement is required.
How can i get a Bp number
Hi Brian.
You get a BP number by registering with ZIMRA. You can go directly to ZIMRA or we can process this for you.
Thank you very much for the info. You really make life easy.
Thank you so much for providing us with some information,this is what I was looking for all along.
Hi Angel and Walt,
Are farm products and horticultural ornamental plants charged with tax?
Hi Anna.
That depends on the type of tax. The company selling these products is subject to income tax but some of the products may be zero rated when it comes to VAT.
Angel & Walt, please be specific;
Those flowers we find people selling locally on the market. That is the pitunias, trees, shrubs, herbs, bulbs, palms, dianthus etc.
Hi Anna.
We highly recommend getting in touch with our tax consultants for specific answers. Using this platform we only have general information so our responses are also general in nature.
You can make use of the Whatsapp button at the bottom left corner of this page to begin chatting
thank you for this very informative article! do nonprofits/NGOs/PVOs/CSOs need this tax clearance? thank you