How to fix your tax clearance challenges experienced in January & February 2021 ahead of 2022.

Tax payers this year have experienced challenges in accessing 2021 tax clearances due to either one of the reasons below and some other trivial reasons not worth mentioning;

1.     Tax Authority capacity issues;

2.     Tax payer delinquency;

3.     Covid -19 induced challenges.

In most cases tax payer delinquency is the case. Tax payers don’t really understand what a tax clearance is and the pillars that support that paper. Sadly some businesses and individuals find themselves with the paper after cutting comers.

A tax clearance simply means all your tax affairs are in order. You have prepared books of accounts ,competently assessed all your tax heads i.e. PAYE,VAT,CGT,WHT & IT , filled returns and paid tax dues on time, in the  correct amounts and currencies.

Below are the key pointers that  tax payers need to understand going forward if they need to get a clean tax position from my perspective :

Engage your consultant to know which taxes are due for registration and what returns would need to be submitted at any point in time in your trading cycle.

Once registered for a BP number with ZIMRA a company is now assumed trading. Simply complete all relevant returns for tax heads i.e. Income Tax, Withholding Taxes or Pay As You Earn on time whether  you are making losses or there was no activity in a particular period.

Incase you register for Value Added Tax (VAT),you need to fiscalise and interface with ZIMRA systems immediately.

Always record revenue and expense invoices for all tax heads in the correct transaction currency.

Always pay your taxes in the correct currencies.

Always pay your taxes on time.

In the event of cash flow challenges ,communicate with ZIMRA to devise a commissioner approved payment plan.

Always request for tax heads statements and reconcile them to your books of accounts periodically. I have seen some tax payers get shocked of their tax liabilities. There are possibilities of interest and penalties accruing on the statement due to anomalies such as missing returns, mis-posted returns, uncaptured payments or transposed amounts e.t.c

Always have books of accounts and proper documentation to support your tax position.

Constantly visit ZIMRA website for tax knowledge, recent notices and announcements.

I hope this article will help you guys to take corrective actions preparing for your 2021 & 2022 ITF 263s. In God we trust. Get in touch with me on 0718 080 008 or on www.shaphat.com if you need help to set up your own business accounting function. This will also smoothen your tax compliance and other statutory compliance such as ZIMDEF, SDL & NSSA.

Please note that Holderness writes in his own capacity. These are my own opinions and not a regurgitation of facts.

Article by Holderness Magaragada, CA(Z), RPAZ, MCAW