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QPDs

This document provides information about calculating quarterly provisional tax payments (QPDs) in Zimbabwe, defines BOT and BOOT operators in the context of Zimbabwean income tax, and describes tax incentives for various taxpayers. BataiBaba Ltd's QPDs for 2020 tax year are calculated. BOT and BOOT arrangements involve private entities constructing infrastructure for the state in exchange for operating rights. Tax incentives are provided for BOT/BOOT operators, manufacturing entities based on export levels, and industrial park developers and investors for the first 5 years.

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Danisa Ndhlovu
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204 views4 pages

QPDs

This document provides information about calculating quarterly provisional tax payments (QPDs) in Zimbabwe, defines BOT and BOOT operators in the context of Zimbabwean income tax, and describes tax incentives for various taxpayers. BataiBaba Ltd's QPDs for 2020 tax year are calculated. BOT and BOOT arrangements involve private entities constructing infrastructure for the state in exchange for operating rights. Tax incentives are provided for BOT/BOOT operators, manufacturing entities based on export levels, and industrial park developers and investors for the first 5 years.

Uploaded by

Danisa Ndhlovu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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QPDS

(a) Calculate the QPDs for BataiBaba Ltd which has an estimated taxable income of
$2,500,000 for the 2020 tax year. Also, state the due dates. (10 marks)
(b) Explain the terms BOT and BOOT operators in the context of income tax in Zimbabwe.
(4 marks)
(c) Describe the tax incentives available to the following taxpayers in
Zimbabwe.
(i) BOT and BOOT operators. (2 marks)
(ii) Manufacturing entities. (2 marks)
(iii) Industrial park developers and licensed investors. (2 marks)
[Total: 20 marks]

SOLUTION

a. Calculate the QPDs for BataiBaba Ltd which has an estimated taxable income of
$2,500,000 for the 2020 tax year. Also, state the due dates. (10 marks)

Calculation of Bataibaba Ltd tax liability for2020


$2500000×24.72%
=$618 000
i. The first QPD is calculated at 10% of the estimated tax and is due on the 25th
of March.Bataibaba Ltd.’s first QPD is calculated as follows:

x =$61 800

ii. The second QPD is calculated at 25% of the estimated tax and is due on the
25th of June. BataiBaba Ltd.’s second QPD is calculated as follows:

x =$154 500

iii. The third QPD is calculated at 30% of the estimated tax and is due on the 25th
of September. BataiBaba Ltd.’s third QPD is calculated as follows:
x =$185 400

iv. The fourth and final QPD is calculated at 35% of the estimated tax and is due
on the 20th of December. BataiBaba Ltd.’s fourth QPD is calculated as
follows:

x =$216 300

(b) Explain the terms BOT and BOOT operators in the context of income tax in Zimbabwe.
(4 marks)

“BOOT or BOT arrangement” means a contract or other arrangement approved by the


Commissioner, under which a person undertakes to construct an item of infrastructure for the
State or a statutory corporation in consideration for the right to operate or control it for a
specified period, after which period he or she will transfer or restore ownership or control of
the item to the State or the statutory corporation concerned”, (Finance Act; Section 14).
BOT (BUILD OPERATE TRANSFER)
 A public entity engages a private entity and form a PPP (Public Private Partnership.)
 Build- The private entity finances the project.
 Operate- The private entity operates and has full rights of the project for a specified
time usually 20 to 30 years
 Transfer- After the stipulated time of the project, ownership and operations are then
fully transferred to the public entity.
For example, recently the Government awarded a tender to an unnamed private company
to print citizens’ identification (ID) cards and passports under a BOT agreement in a bid
to ease the current backlog of over 200 000 units owing.
BOOT BUILD OWN OPERATE TRANSFER)
 Build- the public and private entities form a partnership to finance a large
project.
 Own- the property, project or contract in this case is owned by the private
entity during the time of the project (usually 20 to 30 years).
 Operate- the private entity will run the operations of the project
 Transfer – at the end of the stipulated time period of the project, ownership is
then transferred fully to the public entity.
For example, the Zimbabwe Investment Authority (ZIA) has already incorporated
a Bui
(c) Describe the tax incentives available to the following taxpayers in
Zimbabwe.

(i) BOT and BOOT operators. (2 marks)

(ii) Manufacturing entities. (2 marks)

(iii) Industrial park developers and licensed investors. (2 marks)

[Total: 20 marks]

(i)BOT and BOOT operators. (2 marks)


According to the Finance Act 14 2(h) a person operating a BOT and BOOT arrangement is
charged a tax rate of 0%(exempt) for the first 5 years and then taxed at 15% for the second
five years and then thereafter taxed at normal rate.
(ii) Manufacturing entities. (2 marks)
With effect from the 1st of January 2015 the rate of tax for manufacturing or processing
companies with exports: -
1. More than 30% or more of its output but less than 41% is charged at a tax rate
of 20% (Finance Act 14 (3)(a).
2. More than 41% or more of its output but less than 51% is charged a tax rate of
17.5% (Finance Act 14(3)(b).
3. More than 51% or more is charged a tax rate of 15% (Finance Act (3)(c).

(iii) Industrial park developers and licensed investors. (2 marks)


An Industrial Park developer is exempted for the first 5 years beginning in the year of
assessment in which the industrial park is established or approved by the minister according
to section 14 of the Income Tax Act.
The same treatment applies to a licenced investors. The first 5 years are exempted “in respect
of that part of the taxable income earned in the year of assessment in which the investor
commences operations and thereafter tax will be charged at the higher specified
percentage”,(Finance Act, Section 14).

REFERENCES
INCOME TAX ACT
FINANCE ACT
ZIMRA WEBSITE

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