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Zimra hits out at errant insurance firms

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THE Zimbabwe Revenue Authority (Zimra) has hit out to insurers who are not remitting insurance commission tax collected from freelance agents.In a statement published last week, Zimra said there were also insurers who are collecting commissions from unregistered short-term insurers.

BY TAFADZWA MHLANGA

THE Zimbabwe Revenue Authority (Zimra) has hit out to insurers who are not remitting insurance commission tax collected from freelance agents.In a statement published last week, Zimra said there were also insurers who are collecting commissions from unregistered short-term insurers.

“The commissioner-general of the Zimbabwe Revenue Authority has noted that some insurers are not withholding and remitting Insurance Commission Tax from freelance insurance agencies.

It has also been noted that there are insurance brokers and agents receiving commission from short-term insurers who are not registered for tax,” Zimra said.

“Freelance insurance agents are insurance agents or brokers who are not registered employees, of the insurer they transact with, for the purposes of collecting PAYE (Pay As You Earn),” Zimra clarified.

Zimra said the tax rate should be 20% of the commission collected by the insurers.“Insurers are required to withhold insurance commission tax from the commission paid to the agents or brokers. The insurance commission tax is calculated at the rate of 20%.

“For example, insurer VYT Ltd pays commission to a freelance agent Mr BD Hama of $1 000. The insurer is required to withhold 20% of $1 000 which is $200,” Zimra warned.

Zimra said the tax should then be remitted to Zimra by the 10th of the next month and that a REV5 Return from Withdrawal Taxes form must be completed and submitted to Zimra on the same date.

“A certificate should be issued to the agent or broker showing the name, address and BP Number of the insurer, commission paid and the tax withheld,” Zimra said.

Zimra also added that freelance brokers and agents were obliged to pay the commissioner general insurance commission tax in a situation whereby the insurer did not withhold or recover the tax as per request and register for tax purposes to get a business partner number.

Freelance brokers are also required by Zimra to submit income tax returns for each year of assessment by the due date advised by the commissioner in a public notice.

“Freelance brokers or agents are obliged to pay the commissioner-general insurance commission tax in instances where the insurer has not withheld or recovered the tax from him in the manner outlined under the obligations of the insurer.

“The freelance agent or broker should register for tax purposes and get a Business Partner number. He should submit the income tax returns for each year of assessment by the due date as maybe advised by the commissioner in the public notice,” Zimra said.

Zimra added that short-term insurers and life insurers who were registered in terms of the Insurance Act were exempted from Value Added Tax (VAT) on the insurance business they supply.

“Insurers registered in terms of the Insurance Act are exempt from VAT on the insurance business they supply. This applies to both the short term insurers and life insurers.

Freelance insurance brokers and agents are required to register for VAT and to charge VAT for the agency or brokerage service they render. A freelance agent or broker is required to register for vat where the value of their commission earned from short-term insurance is $60 000 or more in any period of 12 months. Once registered, the agent or broker must charge VAT on commission charged to short term insurers,” Zimra said.

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