Zimbabwe
Harare
EY
ey.com/globaltaxguides
+263 (242) 750-906
Mail address: Fax: +263 (242) 773-842, P.O. Box 62 or 702 +263 (242) 750-707 Harare Zimbabwe
Street address: Angwa City
Kwame Nkrumah Avenue/ Julius Nyerere Way Harare Zimbabwe
Principal Tax Contact
Fungai Vongayi
+263 (242) 750-979
Email: fungai.vongayi@zw.ey.com
International Tax and Transaction Services – International Corporate Tax Advisory
Fungai Vongayi
Shelton Kusotera
+263 (242) 750-979
Email: fungai.vongayi@zw.ey.com
+263 (242) 750-979
Email: shelton.kusotera@zw.ey.com
International Tax and Transaction Services – Transfer Pricing Prince Mandiopera
Fungai Vongayi
Business Tax Services
Fungai Vongayi
Shelton Kusotera
Business Tax Advisory
Fungai Vongayi
Shelton Kusotera
+263 (242) 750-979
Email: prince.mandiopera@zw.ey.com
+263 (242) 750-979
Email: fungai.vongayi@zw.ey.com
+263 (242) 750-979
Email: fungai.vongayi@zw.ey.com
+263 (242) 750-979
Email: shelton.kusotera@zw.ey.com
+263 (242) 750-979
Email: fungai.vongayi@zw.ey.com
+263 (242) 750-979
Email: shelton.kusotera@zw.ey.com
International Tax and Transaction Services – Transaction Tax Advisory Fungai Vongayi
Sifelani Nhliziyo
People Advisory Services
Fungai Vongayi
Velile Ngwenya
Indirect Tax
Fungai Vongayi
+263 (242) 750-979
Email: fungai.vongayi@zw.ey.com
+263 (242) 750-979
Email: sifelani.nhliziyo@zw.ey.com
+263 (242) 750-979
Email: fungai.vongayi@zw.ey.com
+263 (242) 750-979
Email: velile.ngwenya@zw.ey.com
+263 (242) 750-979
Email: fungai.vongayi@zw.ey.com
10%. A 15% rate applies to dividends paid by any other company to resident persons other than companies.
(f) This is a final withholding tax imposed on residents. The following types of interest are exempt from income tax and withholding tax:
• Interest on deposits with a term of more than 12 months
• Interest paid by the People’s Own Savings Bank
• Interest on building society Class C (tax-free) shares
The 5% rate applies to interest on fixed-term deposits of at least 90 days with financial institutions. The 0% rate applies to fixed-term deposits of more than 12 months.
(g) This is a final tax imposed on the income on the maturity of treasury bills, bankers’ acceptances and discounted instruments traded by financial institutions that are purchased by resident investors who are not financial institutions. The tax is imposed at the time of disposal or maturity of the instrument.
(h) This withholding tax is imposed on nonresident persons. The income may also be subject to income tax.
(i) The withholding taxes are paid to the ZIMRA in local currency.
(j) This is a final tax imposed on remittances transferred from Zimbabwe to nonresidents for allocable technical, managerial, administrative or consulting expenditures with respect to services that were provided to a resident by a nonresident person in relation to trade carried on in Zimbabwe.
(k) A 15% withholding tax rate applies on payments by residents to nonresident persons for technical, managerial, administrative and consulting services. A withholding tax of 20% is imposed on payments of non-executive directors’ fees and property and insurance commissions paid to residents and nonresidents who are not employees. The tax withheld is credited to income tax, while for non-executive directors, the 20% is a final tax.
(l) This is a tax on the payee, which is withheld by the payer from all payments made under contracts of USD1,000/ZWG equivalent of USD1,000 or more over the year of assessment to resident suppliers who do not provide a valid tax-clearance certificate at the time of payment.
(m) The tax is withheld by an appointed Value-Added Withholding Tax Agent from payments for taxable supplies to specified noncompliant registered value-added tax (VAT) operators. The tax is offset in the following month against output tax.
(n) The tax is withheld at 2% on amounts exceeding USD5 or the ZWL/ZWG equivalent of USD5 that are mediated by a financial institution. Between 1 June 2023 and 2 May 2024, the rate of intermediated money transfer tax (IMTT) on USD transactions was 1%. The rate was changed, effective from 3 May 2024, to 2%. The maximum tax is USD10,150 or the local currency ZWL/ZWG equivalent for transactions that are equivalent to or exceed USD500,000 or the local currency equivalent of USD500,000. Between 1 January 2024 and 2 May 2024, the rate of IMTT on outbound foreign payments and Zimbabwe gold-backed digital (ZWG) tokens was the following:
• USD0.01 per outbound foreign payment transaction of USD5 and above.
• USD0.005 per transaction on each ZWG token transaction of USD5 and above
The above rates and wording have since since been corrected with the IMTT rate increased to 2% on each outbound foreign payment and ZWG token. The above rates are chargeable on amounts exceeding USD5 or the ZWL/ZWG equivalent of USD5 that are mediated by a financial institution.
(o) Mining losses are ring fenced to specific locations and may be carried forward indefinitely.
B. Taxes on corporate income and gains
Corporate income tax. Income tax is levied on all amounts (other than capital) received or accrued to residents from a Zimbabwean or a deemed Zimbabwean source, less expenditures that are incurred in the production of income or for purposes of trade. Certain specific types of income are exempt.
Nonresident companies that carry on business in Zimbabwe are subject to corporate income tax on all taxable income, wherever arising, attributable to a permanent establishment in Zimbabwe.
Foreign interest and dividends accruing to taxpayers that are ordinarily resident in Zimbabwe are deemed to be from a source in Zimbabwe. A corporation is ordinarily resident in Zimbabwe if it is managed and controlled in Zimbabwe.
Specified assets acquired on or after 22 February 2019. Tax is chargeable at 20% on capital gains on disposals of immovable property and unlisted shares. For listed shares held for less than 180 days, tax is chargeable at 4% of the gain. Capital gains tax on listed securities is repealed for six months beginning 28 June 2024.
Other rules. For purposes of calculating capital gains tax, the following deductions are available:
• Recoupment chargeable to tax in terms of the Income Tax Act [Cap 23:06].
• Improvements to immovable property.
• An inflationary allowance based on movement of the All Items Consumer Price Index from the date of purchase to the date of disposal. This is applied on the purchase or construction cost and improvements to the asset being disposed of.
• Selling and associated costs of the property.
Any capital gains withholding tax paid is credited with any excess amount being refundable.
The 2% withholding tax on the disposal of listed securities is a final tax.
Capital gains on the disposal of shares to an approved indigenization partner or community share ownership trust or scheme are charged on the amount paid and not the fair market price.
Shares disposed to employees under an approved employee share ownership scheme are exempt from capital gains tax. The disposal of the same shares to the scheme is also exempt from capital gains tax.
Administration. Zimbabwe’s tax year ends on 31 December. Tax returns must be filed by 30 April of the following year. However, capital gains tax returns must be submitted within 30 days from date of the transaction. Tax is based on self-assessment except for employees who would have worked for less than a full calendar year.
Corporate and employment tax must be paid in the currency the income was earned, received or accrued.
Income tax is paid in the currency of trade. If income is earned 100% in foreign currency, the tax liability must be paid in that currency. The reverse is true with respect to income earned in local currency. If income is earned in both local and foreign currency, tax must be paid in both currencies based on their relative contributions. Effective from the tax year beginning 1 January 2022, taxpayers must submit two income tax returns if income was earned in local and foreign currency. Earnings in other foreign currencies other than US dollars (USD) must be converted to USD at the international cross rate of exchange. With the new Tax and Revenue Management System (TaRMS), only one return that is divided into USD and ZWG tax computation segments is submitted. This is effective from December 2023.
All expenses must be proportionately apportioned between the USD and Zimbabwean ZWG returns based on the USD and ZWG income tax ratios.
The following table lists certain assets, the method used and applicable wear and tear rates.
* Toll roads and toll bridges declared to be such under the Toll Roads Act are classified as industrial buildings.
A special rule applies to the rebasing of unredeemed balances on USD purchased assets translated to ZWL. The taxpayer must rebase any balances of qualifying assets that remained unredeemed as of 31 December 2022. The unredeemed USD invoice values that are reported in local currency must be rebased using the Reserve Bank of Zimbabwe auction exchange rate prevailing on 1 January 2023.
On disposal of an asset, capital allowances previously claimed will be included in gross income and taxed at the normal corporate tax rate. The recoupment is limited to allowances that were previously claimed. If proceeds exceed the allowances, the excess amount is not taxable.
Relief for losses. Losses, including assessed tax losses, are taxdeductible. Assessed tax losses can be claimed up to six years from the year they are realized, after which they expire. However, assessed losses for mining operations are perpetual; that is, they do not expire. Losses from one mining operation cannot be claimed by another operation. Assessed losses cannot be carried back.
Groups of companies. Tax is charged on a separate entity approach. No tax is levied on a group.
Transfer of assets between companies under the same control. To avoid recoupment on the transfer of assets between companies under the same control, transferor and transferee may elect to transfer assets at their income tax values. Tax on the recoupment will be charged on the subsequent disposal of the assets to a person outside the group.
D. Other significant taxes
The following table summarizes other significant taxes. Nature
VAT; imposed on the supply and importation of goods and services; certain items are exempt, including financial services, medical services, fuel, tobacco, educational or training services, long-term residential leases and transport of passengers by road or rail; also imposed on certain exports; suppliers of qualifying goods and services with an annual value in excess of a specified threshold must register; the annual threshold is currently USD25,000