A company is considered a “person” for tax purposes. Accordingly, the company incurs its own tax liability and is responsible for settling the liability. The revenue authorities, however, require an individual who may be held accountable for the company’s obligations. According to the Income Tax Act [Chapter 23:06] (the “Income Tax Act”) every company which carries on a trade or has an office or other place of business in Zimbabwe is obligated to appoint a public officer within 1 month from the establishment of such office or other place of business. As a result, every person intending to do business in Zimbabwe must be aware of this requirement as the Zimbabwe Revenue Authority (“ZIMRA”) online portal will not allow one to register a company for tax without appointing a public officer.
The Income Tax Act also provides, however, that a failure to appoint a public officer will result in the Commissioner of Taxes (the “Commissioner”) appointing the managing director, a director, or secretary of the company as a public officer. This section of the Income Tax Act notwithstanding, attention is drawn to the fact that a penalty does attach to the failure to appoint a public officer. If a company fails to appoint a public officer within 1 month of establishment of an office or place of business, then every person who acts as agent or manager for the company shall incur a penalty of a fine for every day the default continues.
A public officer is the company’s representative taxpayer. Accordingly, the public officer may be liable for assessment in his / her own name (but in a representative capacity only) in respect of the income of the company and shall be subject in all respects to the same duties, responsibilities and liabilities as if such income were received by or accruing to or in favour of him / her beneficially.
Although the assessment will be in the name of the public officer, it may only be recovered from the company. The public officer will only become personally liable in the event that, whilst the tax remains unpaid, he / she:
- he alienates, charges or disposes of the income in respect of which the tax is chargeable; or
- he disposes of or parts with any fund or money which is in his possession or comes to him after the tax is payable when from or out of such fund or money the tax could lawfully have been paid.
It is important that public officers bear this in mind as the section of the Income Tax Act is wide and may have far reaching effects. As with any officer of the company, criminal penalties may be levied on a public officer in the event that he / she wilfully fails to comply with the provisions of the Income Tax Act whilst acting on behalf of the company.