TAX BULLETIN Zimbabwe 2014
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TAX BULLETIN Zimbabwe 2014
BDO TAX SERVICES
We will work with you to:
Provide instant support in a tax crisis
Achieve commercial business decisions based on practical tax solutions
Maximise investors’ after tax returns, while controlling tax risks in line with
business risk strategy
Understand your business to provide tailored tax services to meet your tax and
business needs
Adopt a co-ordinated approach to international tax planning, using our BDO
International network with tax experts in over 110 countries.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 1CONTENTS
1 INTRODUCTION............................................ 3
2 RATES OF TAX: EMPLOYMENT INCOME ................. 4
3 HIGHLIGHTS OF THE 2014 BUDGET ..................... 6
4 TAXATION IN ZIMBABWE………………………………………….. 19
5 TAXATION OF INDIVIDUALS .............................. 19
Benefits .................................................... 19
Exempt income ........................................... 21
Deductions ................................................. 21
Prohibited Deductions………………………………………………. 22
Credits ..................................................... 22
Tax computation example: Individual ................. 23
6 TAXATION OF COMPANIES ................................ 24
7 CAPITAL ALLOWANCES ................................... 26
8 WITHHOLDING TAXES .................................... 29
9 PRESUMPTIVE TAXES…………………………………………………. 31
10 CAPITAL GAINS TAX....................................... 33
11 VALUE ADDED TAX ........................................ 35
12 PAYROLL TAXES ........................................... 37
13 ESTATE DUTY .............................................. 38
14 STAMP DUTY ............................................... 38
15 CUSTOMS DUTY……………………………………………………….…. 38
16 TAX RATES ................................................. 39
17 DOUBLE TAXATION AGREEMENTS ....................... 41
18 TAX RATES IN SELECTED COUNTRIES………………………. 43
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 21. INTRODUCTION
BDO Tax & Advisory Services (Private) Limited is an associate firm of BDO Zimbabwe.
BDO Zimbabwe, a Zimbabwean partnership, is a member of BDO International
Limited, a UK Company Limited by guarantee, and forms part of the BDO network of
independent member firms. BDO is the brand name for the BDO network and for
each of the BDO member firms.
BDO Tax & Advisory Services (Pvt) Ltd is geared towards offering tax planning
strategies and policies that minimize your tax burden and ensure the success of your
business.
We provide instant support in a tax crisis and help to protect you from the risk of
non-compliance against the backdrop of intense levels of scrutiny from the tax
authorities.
The contents of this booklet incorporate the 2014 tax proposals and give a brief
outline of the tax system in Zimbabwe.
We advise our clients to seek professional advice from the firm before making any
decision regarding the contents of this booklet.
2014 BUDGET: - TAXATION PROPOSALS
The 2014 budget proposals were presented on the 19th December 2013 by the
Finance Minister, Honourable Patrick Chinamasa and the tax measures went through
Parliament in January 2014.
Salient features of the taxation measures in the budget are summarized below:-
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 32. RATES OF TAX: EMPLOYMENT INCOME
2014 ANNUAL PAYE TABLE
1st January 2014 – 31st December 2014
Band of Taxable Income Amount Tax Rate Tax Cumulative Tax
US$ US$ % US$ US$
1 - 3 000 3,000 0% - -
3 001 - 12 000 9,000 20% 1,800 1,800
12 001 - 24 000 12,000 25% 3,000 4,800
24 001 - 60 000 36,000 30% 10,800 15,600
60 001 - 90 000 30,000 35% 10,500 26,100
90 001 - 120 000 30,000 40% 12,000 38,100
120 001 - 240 000 120,000 45% 54,000 92,100
240 001 and more 50%
Annual Ready Reckoner Table: 1st January 2014 – 31st December 2014
Band of Taxable Income Tax Rate Cumulative Band
US$ % Deduct
US$
1 - 3 000 Multiple By 0% Less -
3 001 - 12 000 Multiple By 20% Less 600
12 001 - 24 000 Multiple By 25% Less 1,200
24 001 - 60 000 Multiple By 30% Less 2,400
60 001 - 90 000 Multiple By 35% Less 5,400
90 001 - 120 000 Multiple By 40% Less 9,900
120 001 - 240 000 Multiple By 45% Less 15,900
240 001 and more 50% Less 27,900
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 4Monthly Table: 1st January 2014 – 31st December 2014
Band of Taxable Income Amount Tax Rate Tax Cumulative Tax
US$ US$ % US$ US$
1 - 250 250 0% - -
251 - 1 000 750 20% 150 150
1 001 - 2 000 1,000 25% 250 400
2 001 - 5 000 3,000 30% 900 1,300
5 001 - 7 500 2,500 35% 875 2,175
7 501 - 10 000 2,500 40% 1,000 3,175
10 001 - 20 000 10,000 45% 4,500 7,675
20 001 and more 50%
Monthly Ready Reckoner Table: 1st January 2014 – 31st December 2014
Band of Taxable Income Tax Rate Cumulative Band
US$ % Deduct
US$
1 - 250 Multiple By 0% Less -
251 - 1 000 Multiple By 20% Less 50
1 001 - 2 000 Multiple By 25% Less 100
2 001 - 5 000 Multiple By 30% Less 200
5 001 - 7 500 Multiple By 35% Less 450
7 501 - 10 000 Multiple By 40% Less 825
10 001 - 20 000 Multiple By 45% Less 1,325
20 001 and more 50% Less 2,325
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 53. HIGHLIGHTS OF THE 2014 BUDGET
3.0 INCOME TAX
3.1 EMPLOYMENT TAX RATES
The individual income tax bands remain mainly unchanged except for the
introduction of a 50% band on income exceeding US$20,000 per month.
The marginal tax rate on employment income has therefore increased from
46,35% to 51,5%.
TAX FREE BONUS
The tax free bonus threshold remains pegged at US$1,000 per annum.
DEEMED MOTORING BENEFITS
With effect from 1 January 2014, section 8(1)(f) of the Income Tax Act [Chapter 23:06]
is amended by increasing the deemed motoring benefits as follows;”.
ENGINE CAPACITY 2013 Rate 2014 Rate
Up to 1,500cc USD 150 per month USD 300 per month
1,501cc to 2,000cc USD 200 per month USD 400 per month
2,001cc to 3,000cc USD 300 per month USD 600 per month
Above 3,001cc USD 400 per month USD 800 per month
RETRENCHMENT / SEVERANCE PACKAGES
With effect from 1 January 2013, the non-taxable portion of a retrenchment package
is increased to US$10,000 or one-third of the retrenchment package up to a maximum
of US$60,000.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 63.2 CORPORATE TAX MEASURES
Tax Exemptions - Income from Mortgage Finance
With effect from 1 January 2014, in addition to building societies, receipts by
financial institutions attributable to mortgage finance for residential
accommodation are exempt from income tax.
Tax Exemption - Interest earned on loans to small scale miners
With effect from 1 January 2014, interest accruing from loans to small scale
gold miners is exempt from tax.
Insurance and Pension housing fund
With effect from 1 January 2014, receipts and accruals of the fund are exempt
from tax.
Tax Exemption: Investor Protection Fund
With effect from 1 January 2013, receipts and accruals of the fund are exempt
from tax.
Indigenisation and Empowerment costs
The following costs of indigenisation and empowerment are tax deductible
with effect from 1 January 2013:-
(i) any contribution or donation paid by a taxpayer in the year of
assessment to a community share ownership trust or scheme
established by the taxpayer in compliance with the Indigenisation and
Empowerment Act [Chapter 14:33].
(ii) the value of shares of a corporate taxpayer that are lent in the year of
assessment to an indigenisation partner of the taxpayer pursuant to a
corporate vendor-financed loan; the deduction will be spread over the
tenure of the loan.
(iii) Loan interest payable by an indigenisation partner in the year of
assessment on any loan advanced to him or her to purchase shares in
the company of which he or she is an indigenous partner;
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 7Prohibited Deductions: Royalties
With effect from 1 January 2014, royalties paid during the year of assessment
will no longer be tax deductible.
Transfer Pricing
With effect from 1 January 2014, new transfer pricing regulations have been
introduced which empower the Commissioner to adjust the taxable income
where there is income split between a taxpayer and an associate.
Depletion Fees
A depletion fee at a rate of between 2.5% to 5% on the “gross value of the
proceeds of the sale of any minerals” will now be payable to the Consolidated
Revenue Fund with effect from 1 January 2014 as opposed to the Minerals
Marketing Corporation of Zimbabwe (MMCZ).
“Gross value of the proceeds of the sale of minerals” means the full value of
such proceeds before any deduction by the MMCZ, including any deduction
that the MMCZ would have been entitled to make.
Special dividend on sale of diamonds
A special dividend based on 15% of the gross value of the proceeds of any sale
of diamonds will be payable by the MMCZ to the Consolidated Revenue Fund
within 24hours of acquaintance of export documentation to a batch of
diamonds.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 83.3 VALUE ADDED TAX
Zero-Rating of products
White Sugar-
In order to avail relief to manufacturers and retailers, white sugar, is now zero
rated retrospectively with effect from 1 February 2009.
Soya Bean Crude Oil –
In order to alleviate the costs associated with importation of crude oil,
thereby enhancing local refining of cooking oil, it is proposed to zero rate and
suspend customs duty on imported soya bean crude oil.
Local Diamond Sales
With effect from 1st January 2014, local sales of rough diamonds are zero rated
to encourage beneficiation/ value addition.
VAT Deferment
The 90 day VAT deferment facility will continue to be available for the
importation of industrial and capital equipment by companies in the mining,
agriculture, manufacturing, and health and aviation transport sectors.
VAT exemption on imported electricity
It is proposed to exempt electricity imports from VAT retrospectively with
effect from 1 February 2009.
Rationalisation of zero rated products
With effect from 1 January, 2014, the following goods were removed from the
list of zero-rated products: yoghurt, cream, butter and plain buns.
Input Tax – Prohibited Deduction
With effect from 1 January 2014, input tax cannot be claimed on the export of
unbeneficiated hides, unbeneficiated platinum or raw diamonds.
Tax Invoices
With effect from 1 January 2014, suppliers will be penalised for failure to issue
VAT invoices with prescribed features.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 9Penalties for late VAT registration
With effect from 1 January 2014, failure to register for VAT will attract a fine
not exceeding US$30 for every day the taxpayer remains unregistered.
Input Tax - Bill of Entry
With effect from 1 January 2014, the time period within which a Bill of Entry
can be used to claim input tax has been limited to twelve months.
Objections against fiscalised electronic registers
With effect from 1 January 2014, the VAT Act (Chapter 23:12) is amended in
order to allow clients to lodge objections against the assessment or decisions
made in respect of fiscal regulations.
VAT on Exports: Minerals
With effect from 1st January 2015, a 15% VAT on exports will be levied on
exports of unbeneficiated platinum and rough diamonds.
VAT on Exports
With effect from 1st January 2014 unprocessed hides will be levied an export
tax of $0,75 per kg.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 103.4 WITHHOLDING TAXES
Royalties
With effect from 1 January 2014, the rates of royalties for small scale miners
of gold have been reviewed from 7% to 3%.
Taxation of Non-Resident Artists or Entertainers
With effect from 1 January 2014, Section 80 of the Income Tax Act (Chapter
23:06) has been amended to include artists.
A 15% withholding tax will be levied on gross fees paid to non-resident
performing artists.
The withholding tax is due from a withholding agent, who includes a
“contractor” of the services of a non-resident artist or entertainer contracted
to perform in Zimbabwe.
The amount so withheld shall be remitted to the Commissioner on or before
the 10th day of the month following that in which the payment was made, or
within such time as the Commissioner may allow.
New definition of “payment” for withholding tax on contracts
With effect from 1 January 2014, the definition of “payment” for the purposes
of withholding tax on contracts was amended to cover all forms of payment
under withholding amounts on contracts. It includes payment by cash, barter,
set-off, crediting a director’s loan account, intercompany debits/credits, and
other settlement of obligations of whatsoever and in any form.
Amendment to the definition of “payment” does not clearly define payments
that would qualify as specific exclusions.
Extension of intermediated money transfer tax
With effect from the 1st January 2014, an intermediated money transfer tax of
USD0.05 is paid per transaction whenever a transfer of funds occur using
mobile platform service.
A financial institution as defined in the Thirtieth Schedule will include any
mobile banking service.
Automated financial transactions tax
Automated financial transaction tax of US$0.05 is extended to apply on
transfer of funds from a financial institution to a mobile platform.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 113.5 CAPITAL GAINS TAX PROPOSALS
Cession of properties
Cession of property rights are subject to capital gains tax with effect from
1st January 2014.
Membership interest in condominium
With effect from 1 January 2014, capital gains tax will be levied where a
person relinquishes a membership interest in a condominium in favour of
another person.
Condominium refers to a company, partnership or other association that owns
immovable property such as flats, apartments or residential units where
members have a right to occupy properties for accommodation or to a time
sharing interest in such property.
Disposal of immovable property through shares
Legislation will be introduced to curb evasion of Capital Gains Tax through the
disposal of shares in the company owning the immovable property (only
proposal not in the final bill).
Exemptions from Capital Gains Tax
Market price of shares sold to an indigenisation partner
With effect from 1 January 2013, disposals of shares under an indigenisation
scheme are exempt from CGT. The exemption is restricted to:-
“the amount by which the fair market price of shares sold to an indigenisation
partner or community share ownership trust or scheme exceeds the actual
price at which those shares were sold”.
Capital Gains Tax clearance certificate
With effect from 1 January 2014, a capital gains clearance certificate is
required where there has been a sale by cession of properties.
The same principle will apply to the relinquishing and registration of a
membership interest in a condominium.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 123.6 CUSTOMS AND EXCISE PROPOSALS
Rebate of duty
Travellers’ Rebate
With effect from 1 January 2014, cooking oil and laundry bar soap are
removed from the travellers’ rebate.
Manufacturer’s Rebate
Clothing Manufacturing Industry
The rebate of duty on imported raw materials for use in the manufacture of
clothing has been extended by a further period of one year.
Beverages Manufacturing Industry
15% duty on aluminum cans imported from the region is removed with
effect from 1 January 2014.
Wines and Spirit Manufacturing Industry
In support of the initiative by a local wine producer to modernise plant and
machinery to enable production of ciders, it is proposed to ring-fence
importation of fermented apple base, under the manufacturers rebate.
Sugar Industry-to protect the local sugar industry
It is proposed to review upwards, customs duty on imported sugar from 10%
to 10% + US$100 per ton.
Blanket Manufacturers
In support of value addition efforts by the blanket manufacturers, it is
proposed to review duty on finished products as follows:-
Tariff Code Product MFN Rate (%) SADC Rate Proposed Rate
(MFN/SADC)
5603.1300 Batting 10 0 40%+US$2.50/kg
6003.3400 Knitted Lingerie 10 0 40%+US$2.50/kg
6005.3400 Knitted Fabric 10 0 40%+US$2.50/kg
6006.3400 Mattress Ticking 5 0 40%+US$2.50/kg
6301.2000 Blankets 40%+US$1.50/kg 0 40%+US$2.50/kg
Baking Industry
It is proposed to review downwards the ring-fenced wheat flour imports by
bakeries at a lower duty rate of 5% from 7 500 to 5 000 metric tons per
month.
In order to promote agro-processing, it is proposed that wheat should be
wholly produced and milled into flour, in order to qualify under Rules of
Origin for purposes of preference.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 13Rebate of duty on capital equipment imported by tourism operators
To enable the tourism and hospitality industry to implement the expansion
and modernisation programme, the rebate of duty on capital goods is
reintroduced, with effect from 1 January 2014, for a period of 12 months.
Suspension of customs duty on motor vehicles imported by safari
operators
The suspension of duty on motor vehicles used by safari operators has been
reintroduced, for a further period of 12 months with effect from 1 January
2014.
The terms and conditions that applied to the previous facility will be
maintained.
Zero rating of imported capital equipment for duty purposes
In support of efforts by the local industry to re-tool, Government has zero
rated capital equipment for duty purposes.
Lapse of the Zimbabwe-South Africa Bilateral Trade Agreement
Due to the lapse of the Zimbabwe South Africa Agreement, it is proposed to
suspend customs duty preferences under the 1964 Bilateral Trade Agreement
between Zimbabwe and the Republic of South Africa, until such a time when
the parties agree to reciprocate the application of the Agreement.
Exclusion of locally produced capital equipment
In order to promote linkages and build synergies between industries, it is
proposed to exclude locally produced equipment from rebate of duty under
the National Project Status.
Excise Duty on ethanol
The suspension of duty on ethanol and levy excise duty of US$0.05 per litre
of ethanol was lifted, with effect from 1 January 2014.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 14STEEL AND PLASTIC MANUFACTURERS
In order to provide relief to the steel and plastic manufacturers, duty on
finished goods has been reviewed as follows:-
Tariff Product MFN Rate SADC Rate Proposed Rate
Code (%) (%) (MFN/COMESA/SADC)
3920.2010 Printed Polymers of propylene 10 0 40/30
3923.2100 Plastics bags of polymers 15 20 40/30
3924.1000 Plastic basins, buckets, plates 40 15 40/30
& mugs
3924.9000 Plastic basins, buckets, plates 40 15 40/30
& mugs
3917.2320 PVC Pipes 15 0 15
3917.2390 PVC Pipes 5 0 5
3917.3210 HDPE pipes 15 0 15
3917.3220 HDPE pipes 15 0 15
3917.3290 HDPE fittings 15 0 15
3917.4000 PVC fittings 15 0 15
4202.1200 Trolley Case/Back Packs 40+$2.50/kg 5 40+$2.50/kg/25+2.50/kg
6305.3200 Woven polypropylene bulk bags 15 15 40/30
6305.3300 Woven polypropylene bags 15 15 40/30
5407.2090 Woven polypropylene cloth 10 0 40/30
7321.8200 Paraffin Burners 40 0 25/20
7210.4100 Galvanised steel sheets 15 20 25/20
7323.9290 Cast Iron Pots 40 0 20
7615.1900 Aluminium pots, e.t.c 40 0 20
7323.9190 Articles of iron, e.t.c. 40 0 20
7210.4990 Galvanised steel sheets 15 0 25/20
8716.8010 Wheelbarrows 25 15 40/30
8716.9000 Wheelbarrow Parts 5 0 40/30
DAIRY AND PROCESSING INDUSTRY
Duty on milk
Duty on milk has been reviewed to enhance growth and competitiveness of
milk production as follows:
Since powdered milk is an input into the production of fresh milk, yoghurts and
cheese, among other products, it is proposed to ring-fence importation of this
product by manufacturers, under a rebate of duty.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 15DUTY ON MILK (KEY RAW MATERIALS)
Duty on key raw materials has been reduced to enhance competitiveness of
local dairy processors as follows;
Tariff Code Product MFN Rate (%) SADC Rate Proposed Rate
(MFN/SADC)
1806.2000 Ice cream coating 40 10 5
7607.1910 Aluminium Foil 15 0 5
7607.2000 Backed Aluminium 15 0 5
Foil
2109.9010 Stabiliser 10 10 5
4421.9000 Ice Cream Sticks 25 5 5
2008.8000 Strawberry Pulp 25 0 5
2008.2000 Pineapple Pulp 25 0 5
2008.7000 Peach Pulp 25 0 5
BISCUIT MANUFACTURERS
Owing to the fact that Biscuit manufacturers have been facing competition
from imported products, a downward review of duty on imported inputs was
proposed, as follows;
Tariff Product MFN Rate SADC Rate Proposed Rate (MFN/SADC)
Code (%)
0910.1200 Ginger Powder 10 0 5
0801.1100 Desiccated Coconut 10 0 5
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 16PAINT MANUFACTURERS
To protect local producers of paint products who face unfair competition from the
paints imported from the region under preferential agreements and do not attract
customs duty, an upward review of duty on finished paint products is proposed with
effect from 1 January 2014 as follows:
Tariff Product MFN Rate SADC Rate Proposed Rate
Code (%) (MFN/SADC)
3208.1000 Paints Based on 15 0 20
Polyester
3208.2000 Paints Based on Acrylic 15 0 20
3208.9000 Other Paints 15 0 20
3209.1011 Pigmented Water 15 0 20
Thinned
3209.1091 Other Pigmented 15 0 20
3209.1099 Other Paints 15 0 20
3209.9011 Pigmented Water 15 0 20
Thinned
3209.9019 Other Pigmented Paints 15 0 20
3209.9091 Other Pigmented Paints 15 0 20
3209.9099 Other Paints 15 0 20
3210.0011 Pigmented Water Paints 15 0 20
3210.0019 Non-Pigmented Water 20 0 20
Paints
3210.0039 Pigmented distempers 20 0 20
3210.0091 Other Non-pigmented 15 0 20
Metal And Electrical Manufacturers
In order to level the playing field between locally produced and finished
products imported under preferential arrangements, it is proposed to review
duty with effect from 1 January 2014 as follows:
Tariff Product MFN Rate SADC Rate Proposed Rate
Code (%) (%) (SADC/MFN)
7605.2100 Aluminium Cables 10 0 20/30
7614.1000 Aluminium Cables 20 0 20/30
7614.9000 Wire Cables 20 0 20/30
7413.0000 Copper Cables 20 0 20/30
8544.6010 Copper wires 10 0 20/30
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 17RUBBER INDUSTRY
It is proposed to review duty on finished rubber products as follows:
Tariff Product MFN Rate SADC Rate Proposed Rate
Code (%) (%) (SADC/MFN)
4009.1100 Mining Hoses 15 10 25
4009.3100 Mining Hoses reinforced 15 0 25
4010.1100 Conveyer belt with 15 0 25
metal
4010.1200 Conveyer belt with 15 0 25
textile
4012.1190 Other Retreaded Tyres 5 0 US$2.50/k
4016.9100 FloorFloor
covering
covering 15 15 00 2525
Oil Expressers
To protect local cooking oil producers from unfair competition from products
purported to originate within the region which are eligible for preferential
duty, it is proposed to review duty on raw materials and finished products, in
order to support local production, as follows:
Raw Materials
Tariff Description MFN Rate SADC Rate of Proposed MFN/SADC
Code of Duty Duty Rate of Duty
1518.0090 Emulsifiers 10 0 5
4811.9090 Wrappers for Margarine 10 0 5
3823.1900 Palm Fatty Acid 15 0 5
2103.9090 Spices 40 0 10
1108.1900 Starch 15 0 10
Finished Products
Tariff Product MFN Rate SADC Rate (%) Proposed Rate
Code (%) (SADC/MFN)
1515.1920 Vegetable oil 10 0 40
1517.1000 Margarine 15 15 40
3401.1100 Soap Tablets 10 10 40
3401.1900 Soap Bars 10 10 40
3402.9010 Washing powder (not for 5 0 40
retail)
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 184. TAXATION IN ZIMBABWE: GENERAL OVERVIEW
The following direct and indirect taxes are levied in Zimbabwe: -
Income tax which is levied on the annual income of individuals,
companies, partnerships, trusts and estates.
Capital gains tax which is imposed on the disposal of immovable
property and marketable securities.
Value added tax levied on the supply of goods and services.
Various levies such as manpower development levy, standards
development levy, NSSA and workers’ compensation insurance.
Estate duties on deceased estates.
Stamp duty on certain documents.
Stamp duties on transfer of immovable property.
Customs duties on the importation of goods.
Excise duties on certain products.
5. TAXATION OF INDIVIDUALS
Individuals, wherever resident, are subject to income tax on income derived from
an actual or deemed Zimbabwean source. Remuneration for services rendered in
Zimbabwe is taxable in Zimbabwe regardless of where payment is made.
Taxation of expatriates
Expatriates are taxable on their Zimbabwean source income irrespective of where
payment is made. Expatriates may be exempt from tax under the terms applicable
under double taxation agreements. The usual condition is that the expatriate
should be in Zimbabwe for less than 183 days in the tax year and payment is made
offshore.
Every non-resident employer is required to appoint a local resident agent for
P.A.Y.E purposes. Work permits for expatriate staff will only be granted on
condition that the employer is registered for P.A.Y.E through a resident agent.
Benefits
The Income Tax Act provides for the taxation of fringe benefits granted by an
employer in respect of services rendered. The value of the benefit is the cost to
the employer except for use of furniture or quarters where the benefit is the value
to the employee.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 19Retrenchment / Severance Packages
With effect from 1 January 2013, it is proposed to review the non-taxable portion of the
retrenchment package to US$10 000 or one-third of the retrenchment package up to a
maximum of US$60 000.
Deemed Motoring Benefits
With effect from 1 January 2014, section 8(1)(f) of the Income Tax Act [Chapter 23:06] is
amended by increasing the deemed motoring benefits as follows;”.
ENGINE CAPACITY 2013 Rate 2014 Rate
Up to 1,500cc USD 150 per month USD 300 per month
1,501cc to 2,000cc USD 200 per month USD 400 per month
2,001cc to 3,000cc USD 300 per month USD 600 per month
Above 3,001cc USD 400 per month USD 800 per month
Housing and Accommodation
The benefit is based on the value to the employee, which is usually the market
value of the accommodation. The value could, however, be less where the
employee is forced by work circumstances to stay in a house above his standard.
Medical Aid Expenses
The employee is not taxed on employer contributions or refund of medical
expenses by an employer.
Approved Employee Share Ownership Trusts
Where an employee participates in an approved employee share ownership trust,
any amount received or accrued on the sale or disposal of an employee’s shares are
exempt from income tax and capital gains tax. The purchase or sale of the shares
must be done by the trust.
In order to enjoy the benefits, the trust arrangements have to be notarised in a
deed and approved by the Commissioner.
Ring Fencing of tax losses
Income from employment may not be set off against losses incurred on business
activities.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 20Calculation of tax
Taxable income of the individual is computed after considering amounts exempt
from income tax and deductions allowable in terms of the Income Tax Act. While
taxable income from employment is subject to tax at various rates, income from
trade or investment is subject to tax at an effective rate of 25,75% [25% plus 3%
aids levy].
The amount of tax chargeable is then further reduced by credits, which are
dependent on the taxpayer’s circumstances.
Exempt Income
Income exempt from tax includes the following:
Interest received from a financial institution where tax has been withheld
at source.
Dividends paid by locally incorporated companies.
The greater of US$10, 000 or one third of US$60,000 ($20,000) of any
retrenchment package received in terms of an approved retrenchment
scheme.
Contributions paid to a medical aid society by an employer on behalf of his
employees and the value of medical treatment provided by an employer for
an employee and their dependents.
The first US$1,000 of a bonus
Pension received by a tax payer aged above 55 years
The first $3,000 of rental income received by a tax payer aged above 55
years.
The first $3,000 of interest received from a financial institution by a
taxpayer aged 55 years and above.
Deductions
Although fairly limited for employees, these include:
Expenses incurred in the production of income or for the purposes of trade.
Subscriptions to business/professional organizations.
Pension fund contributions by individuals to approved funds including N.S.S.A.
are allowed against income up to a maximum amount of US$450 per month.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 21Prohibited Deductions
The Income Tax Act specifically prohibits certain deductions. The list includes the
following:
Tax payable and interest thereon.
All domestic and private expenditure.
Provisions for anticipated or contingent losses or expenditure.
Entertainment expenditure.
Expenditure incurred in earning foreign dividends.
Assessed losses, other than losses arising from mining operations, brought
forward for more than six years.
Credits
The credits to which an individual is entitled to are:
Mentally/physically disabled person US$900
Blind person US$900
Elderly persons’ credit US$900
Medical expenses $1 for every $2 paid
The age for an elderly person was reduced from 59 years to 55 years with effect
from 1 January 2010.
The elderly persons’ credit is reduced proportionately when the period of
assessment is less than twelve months.
Employees Tax (PAYE)
Employers are required to deduct employees tax (PAYE) on all remuneration paid
to employees.
Executive directors are deemed to be employees and PAYE should be deducted
from their salaries.
Final Deduction System (FDS)
Under the final deduction system, an employer is directed to withhold PAYE from
each employee’s remuneration in such a way as to ensure that the amount
withheld in any year of assessment is equal to the income tax payable by the
employee concerned.
An employee whose remuneration is subject to FDS is not required to complete an
income tax return.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 22THE CALCULATION OF ANNUAL TAX PAYABLE – INDIVIDUALS
[year ended 31st December 2013]
US$
Gross Income 250 000
Less Pension & NSSA (5 400)
TAXABLE INCOME 244 600
Tax on Taxable Income per tax tables 94 170
Less: Medical Aid credit (say) (450)
93 720
Add: 3% Aids Levy 2 812
Total Tax payable 96 532
Less:
PAYE paid (96 400)
Tax Due (132)
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 236. TAXATION OF COMPANIES: INCOME SUBJECT TO TAX
Companies and trusts, like individuals, are taxed on income derived from an
actual or deemed Zimbabwean source.
Foreign interest and dividends are deemed to be from a Zimbabwean source.
Business income is subject to tax at an effective tax rate of 25.75%
(25% plus 3% Aids Levy).
Local company dividends accruing to local companies are exempt from
income tax.
Foreign dividends accruing to local companies are taxed at a flat rate of 20%
with relief being granted on any foreign tax suffered.
Local interest derived from financial institutions is exempt from income tax,
but is subject to a final withholding tax of 15%.
Tax returns filing
The tax year for all taxpayers is 31st December. Taxpayers who are on the self
assessment scheme are required to submit their tax returns not later than four
months after the end of the tax year (i.e. due 30th April).
Specified taxpayers who are required to be on self assessment include those
registered or are required to be registered under Category C for VAT as at 31st
December 2007 or thereafter, or are registered under the Banking Act (Chapter
24:20) or under the Insurance Act (Chapter 24:07).
Loss Carryovers
Assessed losses may be carried forward for a period of 6 years. No loss carry backs
are allowed. There is no restriction on losses incurred by miners.
Treatment of Group Companies
Each group company is treated as a separate taxpayer and losses may not be
transferred between the different companies. Provision is made for assets to be
transferred between group companies at income tax values during the course of a
merger or reconstruction without suffering any tax recoupment. On sale of the
assets, outside the group, the allowances are then subject to a recoupment.
Thin Capitalisation
Any interest, finance charge or other consideration payable by a local branch or
subsidiary which exceeds a debt to equity ratio of three to one is not allowable for
tax.
The disallowed excess is deemed to be a dividend which might be subject to a
withholding tax.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 24Management Fees
The Income Tax Act restricts the amount deductible for general administrative fees
payable on intercompany transactions to an amount equal to roughly 1% of the tax
deductible expenses.
Any excess disallowed is deemed to be a dividend which can be subject to a
withholding tax.
Transfer Pricing
Tax avoidance provisions are available which adjust the prices of goods and
services in terms of certain transactions conducted between related parties to
reflect an arms length price which would have been applied had the transactions
been concluded on normal commercial grounds between unrelated parties.
Provisional Tax: Quarterly Payment Dates (QPDs)
The provisional payment dates for the year ended 31st December 2014 are:
QPD DUE DATE INSTALMENT DUE
1st QPD 25th March 2014 10%
nd th
2 QPD 25 June 2014 25%
3rd QPD 25th September 2014 30%
th th
4 QPD 20 December 2014 35%
100%
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 257. CAPITAL ALLOWANCES
In calculating taxable income, expenditure and losses (other than that of a capital
nature) are allowed to the extent to which they are incurred for the purposes of
trade or in the production of income liable to tax.
Capital expenditure is allowed in the form of Special Initial Allowance, Wear and
Tear and Investment Allowance. The applicable rates differ according to the nature
and category of the asset.
The rate of S.I.A. is 25% with effect from 1 January 2010. An accelerated rate of
25% wear and tear is applicable in the next 3 years.
Immovable assets can only qualify for S.I.A. if they are constructed by the
taxpayer.
Donated or inherited assets can only qualify for the lower wear and tear rates.
Asset Special Wear and
Initial Tear
allowance
% %
Commercial Building - 2,5
Industrial Building 25 5
Farm Building and
Improvements 25 5
Staff Housing 25 5
Movable Assets 25 25
Special Initial Allowance (SIA)
The rate of SIA in respect of allowable capital expenditure is 25% with effect from
1 January 2010.
SIA will be limited to 50% of the cost of fiscalised electronic registers; the other
50% is allowed as VAT input tax.
There is no apportionment of SIA.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 26The taxpayer may elect to claim SIA on capital expenditure incurred on the
following:-
- the construction of farm improvements, industrial buildings, railway lines,
staff housing and tobacco barns.
- additions or alterations to existing farm improvements, industrial buildings,
railway lines, staff housing and tobacco barns.
- the purchase of new or second hand articles, implements ,machinery or
utensils.
SIA is available only in the year in which the asset is used by the taxpayer for the
purposes of trade.
With effect from 1st January 2011, a taxpayer who is defined as a “small or medium
enterprise” will be entitled to S.I.A. of 100% claimable 50% in the first year of
assessment and 25% in the next two years of assessment.
Wear and Tear Allowance (W&T)
The allowance is available on commercial buildings, farm improvements, industrial
buildings, railway lines, staff housing, tobacco barns, articles, implement, machinery
and utensils.
SCRAPPING ALLOWANCE
The scrapping allowance is available when the income tax value of the asset exceeds
any proceeds on the sale of the asset.
Recoupment
A taxable recoupment arises when the sale proceeds of an asset exceed the income
tax value of the asset.
The recoupment is restricted to the original cost of the asset where the sale
proceeds exceed cost.
Restrictions
The following restrictions apply when claiming capital allowances.
Motor Vehicles
The maximum amount allowable on the purchase of a passenger motor vehicle is
USD$10 000.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 27Staff Housing
There is a deductible limit of US$10,000 on staff housing for employees employed at
a school, hospital, nursing home or clinic.
The ranking cost of staff housing is USD$25,000.
Schools, Hospitals, Nursing Homes or Clinics
With effect from 1 January 2009 the deductible limit on capital expenditure on
schools, hospitals, nursing homes or clinics is US$10 000 per annum.
There is no limit on a school, hospital, nursing home or clinic used in connection
with a taxpayer’s farming operations.
Mining
There is a limit of $50,000 in respect of any building used as staff housing by staff employed
at the mine, school, hospital, nursing home or clinic.
Any building used mainly as a school, hospital, clinic or nursing home in connection with
mining operations is also subject to a limit of $50,000.
There is no restriction on any other building used for mining operations.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 288. WITHHOLDING TAXES: RESIDENTS / NON RESIDENTS
RESIDENT SHAREHOLDERS’ TAX [R.S.T.]
Dividends from Zimbabwean resident companies which are distributed to locally
resident individuals, trusts and partnerships are subject to a withholding tax of 15%.
The rate is reduced to 10% for distributions made by companies listed on the
Zimbabwe Stock Exchange.
No tax is however withheld on dividends distributed from one Zimbabwean resident
company to another.
RESIDENTS’ TAX ON INTEREST (RTI)
A 15% residents’ tax on interest is payable on interest paid by a financial institution
to a person who is ordinarily resident in Zimbabwe.
There is an annual exemption of US$3,000 to interest accruing to individuals aged 55
years and above.
NON-RESIDENTS’ TAX ON INTEREST (NRTI)
The 10% NRTI was repealed with effect from 1st August 2009.
NON-RESIDENT SHAREHOLDERS’ TAX ON DIVIDENDS (NRST)
A 15% NRST is deductible from dividends distributed by Zimbabwean companies
including private business corporations to non-residents. The rate is reduced to 10%
for distributions made by companies listed on the Zimbabwe Stock Exchange.
NON-RESIDENTS’ TAX ON FEES (NRTF)
A 15% NRTF is payable on fees paid to non-residents in respect of technical,
managerial, administrative or consultative services.
NON-RESIDENTS’ TAX ON ROYALTIES (NRTROY)
A withholding tax on royalties is chargeable on royalties paid to non-residents for the
use of patents, trade marks, formulae, equipment, motion picture etc.
NON-RESIDENTS’ TAX ON REMITTANCES (NRTR)
A 15% tax is levied on amounts remitted outside Zimbabwe in respect of allocable
expenditure, being expenditure of a technical, managerial, administrative, or
consultative nature incurred by non-residents outside Zimbabwe but in connection
with their trade in Zimbabwe.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 29BANKING INSTITUTION LEVY
The 5% Banking Institution levy was repealed with effect from 1 January 2010.
WITHHOLDING TAX ON NON EXECUTIVE DIRECTORS FEES
Director’s fees payable to non executive directors are subject to a 20% withholding
tax.
Non-executive directors will however be expected to complete tax returns and
declare the fees earned which will be taxed at 25,75% with the 20% withholding tax
deducted at source being granted as a credit.
WITHHOLDING TAX ON TENDERS
A 10% withholding tax is payable on payments of goods and services to suppliers who
do not have a valid tax clearance certificate.
WITHHOLDING TAX ON FOREIGN ARTISTS
With effect from 1 January 2014, a 15% withholding tax will be levied on gross fees
paid to non-resident performing artists.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 309. PRESUMPTIVE TAXES
The following presumptive taxes apply:
Small Scale Miners
A presumptive tax of 20% based on the gross value of the mineral, precious metals
and stones is charged to small – scale miners.
Taxi Cab Operators
The presumptive tax is USD$100 per quarter year for each taxicab so operated.
Commuter Transport Operators
With effect from 1 January 2010, the presumptive tax of each omnibus per quarter
year is:-
USD$150 per bus of a carrying capacity of 8-14 passengers;
USD$175 per bus of a carrying capacity of 15 – 24 passengers per quarter;
USD$300 per bus of a carrying capacity of 25 – 36 passengers per quarter;
USD$450 per bus of a carrying capacity of 37 passengers and above per quarter.
Commercial water borne vessel operators
With effect from 1st January 2012, presumptive tax on operators of house boats and
speed boats is as follows:
Carrying Capacity Boats & Cabin Proposed Tax Per Quarter
Cruisers (People) (US$)
1-5 250
6-15 500
16-25 1,000
26-49 1,500
50 and above 2,000
Operators of fish rigs will be liable to pay US$350 per rig per quarter with effect
from 1 January 2012.
Payment for each Quarter must be made by 20th January, 20th April, 20th July and
20th October of each year of assessment.
Informal Traders
The presumptive tax is 10% of the rent paid by the informal trader.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 31Hair Saloons
The presumptive tax is USD$1,500 per quarter.
Cross Border Traders
The presumptive tax is 10% of the value for duty purposes of the commercial goods
being imported.
Restaurants and Bottle Stores
With effect from 1 January 2010, operators of restaurants or bottle stores not
registered for tax purposes will pay a presumptive tax of US$300 per quarter.
Cottage Industry Operators
With effect from 1 January 2010, operators of cottage industries not registered for
tax purposes will pay a presumptive tax of US$300 per quarter.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 3210. CAPITAL GAINS TAX
Immovable property and unlisted shares acquired prior to 1st February 2009 are
subject to a final 5% capital gains tax on gross proceeds.
Gains from marketable securities listed on the Zimbabwe Stock Exchange are exempt
from capital gains tax but subject to a final 1% withholding tax on gross proceeds.
A capital gains tax of 20 per cent is chargeable on gains arising from the sale of
immovable property and unlisted securities which were acquired after
1st February 2009.
Allowable deductions in the determination of a capital gain are the cost of the asset,
additions thereto, and an inflation allowance at the rate of 2½% per annum.
Mortgage bond interest or any other interest which was incurred in financing the
purchase of a specified asset can also be claimed if the amount is not allowable for
income tax purposes.
A 15% capital gains withholding tax is payable on disposal of immovable property,
while a 5% withholding tax is payable on unlisted shares.
Persons over 55 years are not taxed on capital gains arising from the sale of a
principal private residence.
Capital gains arising from the sale of marketable securities (unlisted) by persons over
55 years of age are exempt from tax in respect of the first US$1,800.
Where a specified asset is sold under a suspensive sale, an allowance is granted for
installments not yet due. The allowance is normally claimed on immovable property
sold under deed of sale agreements.
CAPITAL GAINS TAX ELECTIONS
Legislation allows for the transfer of immovable property or marketable securities
without imposing tax on the seller in certain circumstances. Such circumstances are
as follows: -
sale of a principal private residence where proceeds are used to acquire
another principal private residence;
transfer between spouses;
transfers in a reconstruction scheme or merger and is between companies
under the same control;
transfer by a branch of a foreign company to a company incorporated in
Zimbabwe;
transfer of shares in exchange for a marketable security for no cash
consideration in a scheme of reconstruction or merger;
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 33 transfer by an individual to a company controlled by him if the asset
continues to be used for purposes of trade by the company;
when immovable property used for trade purposes is disposed of and is
replaced by another immovable property used for trade purposes as well,
then any gain on the disposal can be postponed to the extent that the sale
amount is used to purchase the new property.
transfers by a company to a private business corporation into which the
company has been converted into or vice versa, in the course of or in
furtherance of that conversion.
It should be noted that capital gains tax is not levied on transfer by the executor of a
deceased estate or on gains by a licensed investor if the asset formed the whole or
part of the investment to which the licence relates.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 3411. VALUE ADDED TAX (VAT)
VAT is an indirect tax levied at 15% on the supply of goods and services. VAT is also
levied on the importation of goods and services in certain circumstances.
Exempt Supplies
Exempt supplies are supplies that are exempt from VAT.
Common examples of exempt supplies are: -
supply of financial services
supply of educational services
supply of health services
renting of residential accommodation
Taxable Supplies
Taxable supplies are charged to tax at either the zero rate or the standard
rate of 15%.
Zero Rated Supplies
Zero rated supplies are charged to tax at the zero percent.
Common examples of zero rated supplies are:
Certain basic foodstuffs e.g. milk, bread, sugar, salt
Certain goods used for farming purposes
Exported goods and services
The sale as a going concern between two VAT registered traders.
VAT on importation of goods
VAT is chargeable and payable on the importation of any goods into Zimbabwe.
Goods are deemed to be imported on the date the goods are cleared. VAT is paid at
the same time as customs duty.
With effect from 1 January 2010, section 39 of the Value Added Tax Act has been
amended to include the levying of penalties and interest for failure to pay VAT due
on imported services.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 35Imported Services
VAT is payable on the supply of an imported service. An imported service is one that
is made by a supplier who is not a resident of Zimbabwe to a recipient who is a
resident of Zimbabwe and who does not utilize the service for making taxable
supplies.
With effect from 1 January 2010, VAT on imported goods will be based on value for
duty purposes plus any duty excluding surtax levied in terms of the Customs and
Excise Act.
The recipient of the services must within 30 days of the time of importation declare
and pay the VAT to ZIMRA.
Collection of tax on exportation of unbeneficiated chrome
With effect from 1 January 2010, VAT at 15% will be payable on the
exportation of unbeneficiated chrome (chrome and chrome fines).
No input tax credit may be claimed on the VAT.
Fiscalised Electronic Registers
With effect from 1 October 2010 taxpayers in category C are required to record
transactions through fiscalised electronic registers. The cost of fiscalised electronic
registers is zero rated.
Input Tax
No credit for input VAT may be claimed in respect of the following: -
goods or services acquired exclusively for the making of exempt supplies
sporting and social club fees and subscriptions
entertainment expenditure.
Input tax credit may only be claimed upon production of a valid tax invoice.
50% of the cost of the acquisition of fiscalised electronic registers by a registered
operator qualifies for an input tax deduction.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 3612. PAYROLL TAXES
12.1 P.A.Y.E.
Employers are required to withhold P.A.Y.E. from employees’ remuneration
according to the P.A.Y.E. tax deduction tables unless otherwise instructed
by a tax deduction directive from the Commissioner General.
P.A.Y.E. must be remitted to ZIMRA by the 10th day of the month following
the month in which the P.A.Y.E. was withheld.
12.2 SOCIAL SECURITY
The state operated pension scheme is known as the National Social Security
Authority (NSSA). The rate is 3,5% insurable earnings with a cap of monthly
earnings of $700.
12.3 WORKERS COMPENSATION INSURANCE
Employers are required to insure their employees against accident at work
that could result in disability or death. Employers are therefore required to
pay monthly, to NSSA an amount of workers compensation insurance.
The amount varies according to the sector of the industry.
12.4 STANDARDS DEVELOPMENT LEVY
This is a levy paid towards the Standards Association of Zimbabwe.
Payments are made every quarter at a rate of 0,50% of the quarterly wage
bill.
12.5 ZIMDEF TRAINING EMPLOYER
Every employer is required to pay monthly a manpower levy of 1% of the
monthly wage bill to the Zimbabwe Manpower Development Fund.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 3713. ESTATE DUTY
Estate duty is chargeable on the net value of a deceased person’s estate. The
applicable rates vary on a sliding scale from 1.02% per $100 or part thereof, up to a
maximum of 5% where the dutiable amount is USD$50,000 or above.
EXEMPTIONS
Where there is a surviving spouse or minor child the value of a family home as
defined is not subject to estate duty.
Transfer duty is not chargeable where a property is transferred to a beneficiary who
is a spouse or blood-relative or adopted child of the deceased or to a trustee.
Donations may be exempt if they were made 5 years or more prior to death.
Payments from policies specifically taken out to pay estate duty are not taxable only
to the extent of the duty payable.
14. STAMP DUTY
Stamp duty is imposed on bonds, broker’s notes, cheques, policies of insurance and
registration in a Deeds Registry on the acquisition of immovable property.
15. CUSTOMS DUTY
Customs duty is levied on all goods imported. The effective rates of duty range from
0% to 100%.Import tax is levied on most goods at the VAT standard rate of 15%. In
general, Zimbabwe imposes restrictions on the importations of a range of goods
which require import permits or licences e.g. agricultural products and explosives.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 3816. TAX RATES
Summary of Tax Rates 2013 – 2014
Income tax 2013 2014
Companies and Trusts % %
Basic Rate 25 25
Aids Levy 3 3
Effective rate 25,75 25,75
Capital Gains Tax
Listed securities nil nil
Unlisted securities 20/5 20/5
Immovable property 20/5 20/5
Principal private residence (over 55 years) nil nil
Withholding Taxes
Residents and non resident shareholders tax:-
- Zimbabwe Stock Exchange listed company 10 10
- Any other Company 15 15
Residents tax on Interest 15 15
Non-Residents’ tax on Interest nil nil
Fees and Royalties 15 15
Remittances 15 15
Non executive director’s fees 20 20
Capital gains withholding tax
- Immovable property 15 15
- Listed shares 1 1
- Other shares 5 5
Tobacco Levy
- Sellers nil nil
- Buyers 1,5 1,5
Listed shares are subject to a final withholding tax of 1% with effect from 1st
August 2009.
Capital gains withholding tax rate on assets purchased prior to 1st February 2009
in Zimbabwean dollars is 5%.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 39Special Income Tax Rates
2013 2014
BOOT/BOT Arrangements
- first 5 years 0 0
- next 5 years 15 15
- thereafter 25 25
Industrial Park, Developer
- first 5 years 0 0
- thereafter 25 25
Taxable income of a tourist facility in an
Approved development zone
- first 5 years 0 0
- thereafter 25 25
Taxable income from operation of tourist
Facility 60% or more of turnover consist of
Foreign currency receipts 20 20
Taxable income from manufacturing or
processing company which exports 50% or 20 20
more of its outputs
Taxable income of pension fund trade 15 15
or investment
Taxable income of individual from trade 25 25
or investment
Taxable income of company or trust derived 25 25
from mining operations
Taxable income of holder of special mining lease 15 15
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 4017. DOUBLE TAXATION AGREEMENTS
The following agreements are in force and the applicable withholding taxes are as
follows: -
DIVIDENDS FEES ROYALTIES
% % %
Botswana 10 10 10
Bulgaria 10/15 10 10
Canada 10 10 10
France 10 10 10
Germany 10/15 7,5 7,5
Iran 5 15 5
Malaysia 10 10 10
Mauritius 10 15 15
Namibia 5/10 15 10
Netherlands 10/15 10 10
Norway 15 10 10
Poland 10 15 10
South Africa 15 15 15
Sweden 15 10 10
UK 5/15 10 10
Normal rate 15/10 15 15
Reduced rate on non-residents shareholders tax applies to a dividend
declared by Zimbabwean companies to non-resident companies
controlling 25% or more of the voting power of the paying company.
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 4116. ROYALTIES
Diamond.................................15
Other precious stones.................10
Platinum.................................10
Gold: Small scale miners..............3
Other miners.............................7
Other precious minerals................4
Base metals...............................2
Industrial metal..........................2
Coal bed Methane.......................2
Coal........................................1
Gold produced by small scale miners 3%
Gold produced by other miners 7%
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 4219. COMPARATIVE RATES OF TAXES PAYABLE IN CERTAIN
SOUTHERN AFRICAN STATES
Botswana Malawi South Zambia Zimbabwe
Africa
INDIVIDUAL TAX
Maximum rate 25% 30% 40% 35% 51,5%
Level of taxable P144 000 MWK600 000 R673 101 K70 800 000 US$240 000
income at which
maximum rate applies
COMPANY TAX
Manufacturing – 50% 15% 18% 28% 35% 20%
Normal non mining, 22% 30% 28% 35% 25.75%
local
Non-resident Branch 30% 35% 33% 35% -
Mining and other 22% - 55% 30% 28% 30-45% 15% - 25%
Cellphone Operators 22% 33% 28% 35% 25,75%
OTHER TAXES
Distributed Profits Tax - - 10% 15% -
CGT 22% - 10%/14% - 15%
VAT 12% 16,5% 14% 16% 15%
NRST 7,5% 5%/10% - 15% 10%/15%
NRTI 15% 15% NIL 15% NIL
RTI 10% 20% - 15% 15%
NRTF 15% 15% - 20% 15%
Royalty Tax 10% 15% 12% 15% 15%
(withholding tax)
Dividend withholding 7,5% 10% 15% 15% 10% - 15%
tax
Rental Income 5%-10% - - 10% 0%- 10%
Non – Resident - 15% 20% 15%
entertainers
Prepared By:
BDO Tax & Advisory Services (Private) Limited
Page 43MEMBER FIRMS WORLD WIDE
- Algeria - Georgia - Oman
- Angola - Germany - Pakistan
- Argentina - Gilbraltar - Panama
- Aruba - Greece - Paraguay
- Australia - Greenland - Peru
- Austria - Guatemaia - Phillipines
- Bahamas - Guernsey - Poland
- Belarus - Hungary - Portugal
- Belgium - India - Qatar
- Boliva - Indonesia - Romania
- Botswana - Ireland - Russia
- Brazil - Isle of man Israel - Rwanda
- British Virgin Isles - Italy - Saudi Arabia
- Bulgaria - Jamaica - Senegal
- Burundi - Japan - Serbia
- Cambodia - Jersey - Seychelles
- Canada - Jordan - Singapore
- Cape Verde - Kazakhstan - Slovak Republic
- Caribbean Region - Kenya - Slovenia
- Cayman Islands - Korea - South Africa
- Chile - Latvia - Spain
- China (Hong Kong) - Lebanon - Sri Lanka
- China - Liechtenstein - St Marten
- Colombia - Lithunia - Suriname
- Comoros - Luxemburg - Sweden
- Croatia - Macau - Switserland
- Curacao - Madagascar - Taiwan
- Cyprus - Malawi - Thailand
- Czech Republic - Malaysia - Tanzania
- Denmark - Malta - Trinidad & Tobado
- Dominican Republic - Mauritius - Tunisia
- Dutch Caribbean - Mexico - Turney
- East Africa - Morocco - Turkmenstan
- Ecuador - Mozambique - Uganda
- Egypt - Nambia - United States of America
- El Salvador - Netherlands - Venezuela
- Estonia - New Zealand - Veitnam
- Finland - Nigeria - Zambia
- France - Northern Ireland - Zimbabwe
- Norway
Prepared By:
BDO Tax & Advisory Services (Private) Limited
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