The first quarter’s provisional income tax (QPD) for the year is due for payment on or before 25 March 2023. This instalment (payable in the currency of trade) is calculated at ten percent of the projected annual income tax on income from trade and investments.
While taxpayers can calculate the taxable income for each quarter and annualise the calculated income tax, it is recommended that such tax be computed using year to date profit rather than results for the respective quarter. This method ensures that revenue and expenses fluctuations are factored into the annual projection.
The quarterly provisional income tax is then calculated by applying the respective cumulative percentage (as shown below) and deducting the provisional tax already paid.
Where there is need to convert allowable deductions from foreign currency to local currency or vice versa, ZIMRA has advised taxpayers through Public Notice Number 20 of 2023 to use the average Auction Rate of exchange of 808.709 during the first quarter of 2023.
The quarterly average auction exchange rate are determined by the summation of the daily rates and obtaining the average for the following specified quarterly payment dates.
- First QPD – 1 January 2023 to 20 March 2023
- Second QPD – 23 March 2023 to 20 June 2023
- Third QPD – 21 June 2023 to 20 September 2023
- Fourth QPD – 21 September 2023 to 15 December 2023
The return (ITF12B) for provisional tax payment for the quarter must be submitted to the taxation authority on the said date.