1a. Withholding tax and its importance in tax administration.

Withholding tax is the income tax withheld from the employees wages and paid directly to the
government by the employer and the amount withheld is a credit against the income taxes the
employee must pay during the year.

Section 80(23)6 of the income tax states that the legal requirement is that the 10%withholding tax is
deductible from all amounts payable to all who enter into contract with the state or a statutory board
,quasi government institution and taxpayer who are registered with the Zimra unless the payee
furnishes the paying officer with a tax clearance certificate.

It can also be deducted at source ,especially one levied by some countries on interest or divide paid to
a person resident outside that country.

THE IMPORTANCE OF WITHHOLDING TAX IN TAX ADMINISTRATION

It encourages voluntary compliance

Reduce the cost of collection effort

Prevents the delinquencies and revenue loss

Prevent dry spells in the fiscal standing of the government by providing stabilized cash flows
throughout the taxable year.
1b.

Withholding Tax Description Due Date Rate of Tax

- 10% for
dividends from
Non Residents Within 15 days of the date securities listed on
Shareholders' Tax of distribution stock exchange
- 15% for other
dividends

It is deductible at - 10% for

source from dividends dividends from
Resident paid by Zimbabwean Within 10 days of the date securities listed on
Shareholders' Tax companies . of distribution stock exchange
- 15% for other
dividends

Non Residents' Tax Within 10 days of the date

15%
on Interest of payment

Non-Residents' Tax Within 10 days of the date

15%
on Fees of payment

Non-Residents' Tax Within 10 days of the date

15%
on Remittances of remittance

Non-Residents' Tax Within 10 days of the date

15%
on Royalties of payment

Residents' Tax on Within 10 days of the date

15%
Interest of payment

Within 15 days of the date

Tobacco Levy 1.5%
of distribution

By the 10th day of the

Automated Financial month following the
0.50c
Transactions Tax month in which the
transaction was effected

By the 15th day of the

month following the
Informal Traders' Tax 10%
month in which the tax
was recovered
Demutualisation Within three months after
2.5%
Levy issuing to the member

Banking Institution Repealed with effect from

Levy 1/01/2010

By the 10th day of the

Intermediated Money month following the
0.50c
Transfer Tax month in which the
transaction was effected

Withholding By the 10th day of the

Amounts Under month following month of 10%
Contract payment

By the 10th day of the

Non-Executive
month following month of 20%
Directors' Fees
payment

By the 10th day of the

Property or Insurance
month following month of 20%
Commission Tax
payment