Running a business in Zimbabwe requires more than good products or services. Every registered company is also expected to meet tax obligations, and one of the most important compliance requirements is obtaining a tax clearance certificate from the Zimbabwe Revenue Authority (ZIMRA). A tax clearance is not just a piece of paper. It is proof that a business is up to date with its tax payments and legally recognised as compliant. This article explains what tax clearance is, why it matters, how to obtain it, and the common mistakes that businesses make in the process.
What Is a Tax Clearance Certificate?
A tax clearance certificate, also known as ITF263, is an official document issued by ZIMRA to confirm that a company has complied with its tax obligations. It is renewed annually and is linked to the company’s Business Partner Number (BP number). Without this certificate, a company is considered non-compliant and faces restrictions when dealing with other businesses, banks, or government institutions.
Why Is Tax Clearance Important?
- Business Credibility
Clients, partners, and suppliers prefer to deal with companies that are compliant. A tax clearance shows that your company is operating transparently and responsibly. - Tender Eligibility
Government departments and large organisations require suppliers to have a valid tax clearance before awarding contracts. Without one, your company cannot participate in many procurement opportunities. - Banking and Finance
Many banks and financial institutions request a valid tax clearance before approving loans, overdrafts, or other facilities. - Avoiding Withholding Tax
Under Zimbabwean law, if a company does not present a valid tax clearance certificate, clients are required to withhold 30% of any payment to that company and remit it directly to ZIMRA. This significantly reduces cash flow and profitability. - Legal Compliance
Operating without tax clearance can lead to fines, penalties, and other enforcement measures by ZIMRA.
Who Needs Tax Clearance?
Any registered business in Zimbabwe that earns income must apply for tax clearance. This includes:
- Private Limited Companies (Pvt Ltd).
- Private Business Corporations (PBC).
- Sole traders with significant turnover.
- NGOs or associations conducting taxable activities.
How to Obtain Tax Clearance in Zimbabwe
The process of obtaining a tax clearance involves several steps, all managed through ZIMRA.
1. Register for a Business Partner Number (BP Number)
Before applying for tax clearance, every business must have a BP number. This is the company’s unique tax identity with ZIMRA. To register, a business submits:
- Certificate of Incorporation or Registration (for PBC).
- CR14 and CR6 forms (for Pvt Ltd).
- Proof of address.
- Directors’ or members’ ID copies.
2. Register for the Relevant Taxes
ZIMRA requires businesses to register for taxes depending on their size and activities. These may include:
- Pay As You Earn (PAYE) for employee salaries.
- Value Added Tax (VAT) if turnover exceeds the threshold.
- Income Tax.
- Presumptive Tax (in certain industries).
3. Submit Initial Returns
Even if a company is newly registered, it must submit initial returns or nil returns to show compliance.
4. Apply for Tax Clearance (ITF263)
Once registered and returns are up to date, the company can apply for its tax clearance certificate. This is now mostly processed online through ZIMRA’s e-services portal.
5. Annual Renewal
Tax clearance certificates are valid for a year and must be renewed by staying compliant with all filing and payment obligations.
Timelines and Processing
If documents are in order and there are no outstanding returns or payments, tax clearance can be issued within days. Delays usually occur when returns are missing, payments are overdue, or the company is incorrectly registered for taxes.
Common Mistakes to Avoid
- Not Registering for All Required Taxes
Some companies register for income tax but ignore PAYE or VAT. This creates compliance gaps. - Late Filing of Returns
Submitting returns after deadlines leads to penalties and prevents tax clearance renewal. - Ignoring Nil Returns
Even if a company is not yet trading, nil returns must still be filed. Many new businesses are caught out by this. - Failure to Update ZIMRA
If a business changes its address, directors, or structure, ZIMRA must be informed. Outdated records can block clearance. - DIY Errors
Some entrepreneurs try to manage tax clearance without guidance, leading to mistakes that delay approval.
A Real Example
Avance Business Consultancy assisted a Harare-based construction company that had lost a major contract because it did not have a tax clearance. The company was registered but had not submitted VAT returns for three consecutive quarters. Avance worked with the client to prepare and submit outstanding returns, settle penalties, and apply for renewal. Within three weeks, the company obtained its tax clearance certificate and was able to re-enter tender competitions. This case shows that tax clearance is not just a legal formality but a passport to business opportunities.
How Avance Can Help
Navigating ZIMRA requirements can be time-consuming and confusing. Avance Business Consultancy supports clients by:
- Registering businesses for BP numbers.
- Registering for VAT, PAYE, and income tax.
- Preparing and submitting returns on time.
- Managing applications and renewals of ITF263.
- Advising on compliance to avoid penalties.
With Avance, businesses save time, reduce the risk of errors, and ensure they remain fully compliant.
Conclusion
Tax clearance is one of the most important compliance documents for businesses in Zimbabwe. Without it, companies risk losing clients, tenders, and cash flow due to withholding tax. With it, businesses gain credibility, trust, and access to opportunities. Every business that wants to grow must make tax clearance a priority. By working with professional consultants, you can secure your certificate quickly and keep your company compliant year after year.
Contact Avance Business Consultancy today to secure your tax clearance certificate in Zimbabwe.