🎯 Provisional Tax (QPD) in Zimbabwe: What Every Business Must Know
The Provisional Tax system, known by its payment dates (Quarterly Payment Dates or QPDs), is a mandatory pay-as-you-earn scheme for Zimbabwean businesses and investors.1 It requires taxpayers to estimate their annual taxable income and remit the corresponding income tax in four unequal instalments throughout the year.2
For any entity engaged in trade, business, or investment in Zimbabwe, understanding the QPD system is non-negotiable for compliance and risk management.
1. 📋 Scope and Obligation
Who Must Pay QPDs?
Provisional Tax applies to any taxpayer (companies, trusts, partnerships, or individuals) whose taxable income is derived from trade, business, or investment sources. This specifically includes:
-
Registered companies (taxed at the corporate rate, currently 24% base + 3% AIDS Levy = 25.75% or as currently adjusted).
-
Self-Employed Professionals (e.g., Architects, Engineers, Lawyers, Health Practitioners, Real Estate Agents) who, effective January 1, 2025, transitioned from Presumptive Tax to the Self-Assessment (QPD) system.
-
Licensed Investors after their initial tax-exempt period.
Core Requirement:
Businesses must submit the Provisional Income Tax Return (ITF12B) and remit the payment on or before the due dates.
2. 📅 QPD Deadlines and Instalment Proportions
The Provisional Tax is due quarterly. Businesses are required to revise their estimated annual profit with each quarter to ensure accuracy.
| Quarterly Instalment | Return Due Date (On or Before) | Payment Due Date (On or Before) | Instalment Due (% of Estimated Annual Tax) |
| 1st QPD | 20th March | 25th March | 10% |
| 2nd QPD | 20th June | 25th June | 25% |
| 3rd QPD | 20th September | 25th September | 30% |
| 4th QPD | 15th December | 20th December | 35% |
Crucial Note: ZIMRA now mandates that the return submission date is five days before the payment date (e.g., December 15th for the 4th QPD).
3. 🧮 Calculating Provisional Tax in a Dual-Currency Economy
This is the most complex area for businesses, as the calculation must follow ZIMRA’s rules regarding ZWG and foreign currency (primarily USD) income streams.
| Step | Action and Rule | Compliance Impact |
| 1. Total Income & Proportion | Aggregate all income (ZWG and USD) and determine the percentage contribution of each currency. | Establishes the gross base. |
| 2. The 50% Foreign Currency Rule | If the estimated total income is more than 50% in foreign currency (USD), the tax liability must be calculated as if only 50% was earned in foreign currency and the remainder in local currency (ZWG). | This forces businesses with high foreign currency earnings to account for a portion of their tax in ZWG, regardless of actual earning proportion. |
| 3. Expense Apportionment | Expenses (deductions) must be apportioned using the adjusted currency ratios determined in Step 2. | Ensures the taxable profit calculation is accurate for each currency stream. |
| 4. Final QPD Calculation | Apply the Corporate Income Tax rate (25.75% of the current rate) to the calculated taxable income. The relevant QPD percentage (e.g., $35\%$ for the 4th QPD) is then applied to the total estimated annual tax. | Determines the actual dollar/ZWG amount to be paid for the quarter. |
4. ⚠️ Compliance Risks and Penalties
Failure to comply with QPD deadlines or intentionally underestimating income carries significant financial penalties:
-
Late Submission/Payment Penalties: ZIMRA imposes penalties for late filing of returns and late payment of tax due, in addition to interest charges levied on the outstanding amount. The penalty for late return submission is often a fixed amount per day the return is late.
-
Estimation Error: If the final tax assessment (via the annual ITF12C return) reveals that a business significantly underestimated its provisional tax payments, penalties may be imposed. The Commissioner General may, however, waive interest if the initial estimate was within a 10% margin of error.
-
ZIMRA Assessment: Failure to submit the return at all entitles ZIMRA to issue an estimated assessment of the taxable income and recover the tax due, along with all accrued interest and penalties.
-
No Tax Clearance: Non-compliant businesses will be denied a Tax Clearance Certificate (ITF 263), making it difficult to transact with government entities or large private sector companies (which are often required to withhold 100% or more on payments made to suppliers without a valid clearance).
5. ✅ Key Business Action Items
To ensure smooth QPD compliance, businesses must:
-
Maintain Dual-Currency Books: Ensure all financial records accurately track income and expenditure in the currency of transaction (ZWG and USD).
-
Forecast Accurately: Regularly update the estimated annual income, especially before the 3rd and 4th QPDs, to prevent a large, unexpected tax bill and penalties at year-end.
-
Utilize TaRMS: File all Provisional Tax Returns (ITF12B) and make payments through ZIMRA’s online system, the Tax and Revenue Management System (TaRMS).
-
Reconciliation: Use the 4th QPD to reconcile the total tax paid (10% + 25% + 30% + 35% = 100%) against the final, actual annual tax liability. Any shortfall must be paid immediately.
Would you like to know the current corporate income tax rate that Zimbabwean businesses use to calculate their estimated annual tax?
