INSURANCE COMMISSION TAX

The Commissioner General of the Zimbabwe Revenue Authority (ZIMRA) noticed that some insurers are not withholding and remitting Insurance Commission Tax from Freelance Insurance Agents. It also noted that there are insurance brokers and agents receiving commissions from short-term insurers who are not registered for tax.

Freelance insurance agents are insurance agents or brokers who are not registered employees, by the insurer they transact with, for purposes of collecting PAYE. 

Obligations of the Insurer

1. Insurers are required to withhold Insurance Commission Tax from the commissions paid to the agents or brokers. The Insurance Commission Tax is calculated at the rate of 20%.

Example:

Insurer VTY Ltd pays commission to a freelance agent, Mr B. D. Hama, of $1000.00. The insurer is required to withhold 20% of $1000.00 which is $200.00.

2. The tax should be remitted to ZIMRA by the tenth of the following month.

3. The form REV5 Return for Withholding Taxes must be completed and submitted to ZIMRA by the same date indicated in (2) above.

4. A certificate should be issued to the agent or broker showing

a) Name of Insurer,

b) Address of Insurer,

c) BP Number of Insurer,

d) Commission paid and

e) Tax withheld.

NB: Any other details may also be indicated as the insurer may find appropriate.

Obligations of the freelance agents or brokers

1. Pay to 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 obligations of the Insurer above.

2. Register for tax purposes and get a Business Partner number.

3. Submit Income Tax returns for each year of assessment by the due date as maybe advised by the Commissioner in the Public Notice;

4. Claim Insurance Commission Tax withheld by the insurer or paid in terms of (1) above as a credit against tax payable on assessment of income tax in (3) above.