The third quarter’s provisional income tax (QPD) for the year is due for payment on or before 25 September 2023. This payment, payable in the currency of trade, is calculated at the rate of 30% of the estimated annual income tax on income from trade and investments. It is important to note that taxpayers can choose to calculate the taxable income for each quarter and annualize the computed income tax. However, it is advisable to determine the tax by annualising the year-to-date profit rather than results for the respective quarter. The latter method considers revenue and expense fluctuations, providing a more precise annual projection.
To calculate the quarterly provisional income tax, taxpayers should apply the respective cumulative percentage applicable on the payment date and deduct any provisional income tax already paid. The cumulative percentages for each quarter are as follows:-
| QPD DATE | PERCENTAGE | CUMULATIVE |
|---|---|---|
| 25 March | 10% | 10% |
| 25 June | 25% | 35% |
| 25 September | 30% | 65% |
| 20 December | 35% | 100% |
For instance, if the taxpayer has already paid 35% of the projected annual income tax by the end of the second quarter, this should be deducted from the cumulative tax of the third quarter (65%). The remaining balance would then be the third quarter’s provisional income tax.
In some cases, there could be a need to convert allowable deductions from foreign currency to the local currency or vice versa. In such scenarios, the Zimbabwe Revenue Authority (ZIMRA) has advised taxpayers to use the prevailing average Auction Rate of exchange for converting currencies to ensure consistency in the tax calculations.
To finalize the process, taxpayers must submit the form ITF12B to the taxation authority on or before the due date. The form serves as a declaration to support the provisional income tax payment for the third quarter. It is essential to accurately fill out this form and provide all necessary details to avoid any potential complications.
As the third quarter’s QPD date draws near, staying informed about the requirements and calculations associated with the provisional income tax is vital. By understanding the due date, calculation methodology, and the necessary forms to be filed, taxpayers can ensure compliance and avoid being on the wrong side of the law. Remember, it’s always advisable to consult with tax professionals for personalized guidance based on the taxpayer’s specific circumstances.
