The 30% you lose without a tax clearance

A supplier delivers to a large customer and invoices US$1,500. The money arrives: US$1,050. The missing US$450 was not a mistake. It was the law working exactly as written.

The rule

ZIMRA's page on withholding tax says it plainly. When a supplier cannot show a valid tax clearance certificate, the customer paying them must withhold 30%. It went up from 10% to 30% from 1 January 2022, and it applies once payments to that supplier pass US$1,000 in the year. The customer pays it to ZIMRA by the 10th of the following month.

Is the 30% lost? Not exactly. The customer gives you a certificate of what was withheld, and it counts as a credit against your income tax. But until then it is your cash sitting with ZIMRA, not in your bank paying your staff. For a small supplier, 30% is usually the whole profit on the job, and more.

Ordinary retail sales to the final consumer in a shop are excluded, and so are wages. It bites when you supply other businesses, councils or the State.

What a tax clearance takes

To hold an ITF263 you must be registered, up to date with every return under every Act ZIMRA administers, and up to date with every payment. If you are behind, ZIMRA's advice is to approach them for an arrangement first.

Compliant taxpayers no longer need to apply. ZIMRA generates the certificate automatically and emails it. Most expire twelve months after they are issued; for large and medium clients, on 31 December.

That is also how businesses lose it: one VAT return a week late, one QPD paid short, one PAYE payment forgotten in a busy month.

When you are the one paying

Ask a supplier for their certificate before you pay, and check it is genuine on ZIMRA's site. With no valid certificate, the duty to withhold 30% falls on you: withhold it, send it to ZIMRA and give the supplier a certificate of what you withheld. A payer who fails to withhold is liable for the amount.

How Decima POS helps

Decima Glance lists what needs your attention, such as a quarterly payment that was short or a receipt still waiting for ZIMRA, and Amounts Owed shows what payroll and VAT have left the business owing, to whom, as the books stand today. Each supplier's tax clearance is kept with them, so you know when to withhold.

Three habits to keep your clearance

• File every return on time, even a nil one.
• Pay every QPD, VAT and PAYE amount on its date.
• Keep your email address current with ZIMRA, because that is where the certificate arrives.

Decima Technologies (Pvt) Ltd. General information, not tax advice for your business.