The Zimbabwe Revenue Authority (ZIMRA) is on a mission to apprehend non compliant landlords for informal traders presumptive tax. Informal traders were on a tax holiday for some time now and one would be forgiven to assume that they are exempt from any form of taxation.
Non compliance by informal traders who rent business premises is largely due to ignorance on the part of their landlords. Downright unwillingness to comply on the part of the tenants is another possibility. The lack of ZIMRA spearheaded educational campaigns also contributed to the lacklustre compliance levels.
Informal trader’s presumptive tax must be collected from an informal trader in respect of rented accommodation or place of business. The tax equal to ten percent of the rental amount must be collected from the tenant and remitted to the taxation authority within 30 days from date of collection.
Failure to collect and remit the presumptive tax attracts penalty of 100 percent payable by the landlord without recourse to the tenant. On the other hand failure or refusal to pay the tax by the tenant constitutes a breach of the lease agreement.
A new category of presumptive tax was introduced through last year’s National budget which targeted self employed professionals without a valid tax clearance certificate. They include architects, engineers and realtors, medical and legal practitioners.
These are required to pay the prescribed presumptive tax on a monthly or quarterly basis. In another blog post, yours truly will expand on this presumptive tax on the self employed professionals.
There you have it, if you are a landlord whose tenants are informal traders, then make sure you collect and remit that informal traders presumptive tax on rentals or risk being penalised.