Every individual, company or entity which intends to do business in Zimbabwe must register for tax with the Zimbabwe Revenue Authority (“ZIMRA”). The main taxes which apply to business in Zimbabwe are Income Tax and Value Added Tax (“VAT”). Income tax registration is mandatory for all companies doing business in Zimbabwe. Businesses are required to register for tax online and comply with all the obligations imposed by the Income Tax Act [Chapter 23:06] (“Income Tax Act”).
A business cannot file tax returns without registering for tax. Section 81(1) of the Income Tax Act makes it an offence for a person to fail to file or submit a tax return in violation of the provisions of the Income Tax Act. Furthermore, without registering for tax or filing tax returns, a company will not be able to obtain a Tax Clearance Certificate. A Tax Clearance Certificate is mandatory in order for businesses to do business with other organisations like the State and large organisations. The absence of a Tax Clearance Certificate will prove to be an administrative nightmare for companies intending to do serious business in Zimbabwe.
VAT is the second major form of tax applicable to companies. The Value Added Tax Act [Chapter 23:12] (“VAT Act”) provides that where a company has made supplies that exceed US$ 60,000.00 in the preceding 12 months or estimates that it will make taxable supplies of US$ 60,000.00 in the coming 12 months, then it must register as a VAT operator.
It is mandatory for companies who wish to do business in Zimbabwe to register for tax. Registration for tax is a simple process and can be done online if a company has a bank account, company documents and particulars of its officers. The failure to register for tax can attract criminal liability and is generally ill-advised for a company intending to do serious business in Zimbabwe.