New fiscal proposals 

Source: New fiscal proposals | The Herald November 21, 2019

On November  14, 2019, the Minister of Finance and Economic Development presented the 2020 Budget Statement. Some of the proposals on tax measures aimed at increasing creation of employment, productivity and growth in Zimbabwe are highlighted below:

Pay as You Earn (PAYE)

Year of assessment

2019 Year of Assessment has the following two periods for the purposes of employment income subject to PAYE:

The seven-month period beginning on the January 1st, 2019, and ending on the July 31st, 2019;

The five-month period beginning on the 1st August, 2019, and ending on the 31st December, 2019. This means employers shall be required to assess tax for the two separate periods and submit two separate returns for 2019.

Annual Tax Rates for 2020

With effect from 1 January 2020, the tax free threshold increased to $24 000 per annum for remuneration earned in ZWL and USD840 for remuneration earned in foreign currency.

Annual Tax Table for remuneration in ZWL  Annual Tax Table for remuneration in foreign currency

Performance Award /Bonus

With effect from November 1, 2019, the tax free performance award/bonus portion was increased from ZWL1 000 to ZWL5 000.

Retrenchment Package

With effect from January 1, 2020 the tax free threshold has been raised from ZWL 10,000.00 to ZWL50 000 or one third of the package up to a maximum of ZWL 80 000.

 Motoring Benefits

With effect from January  1, 2020 motoring benefits based on deemed cost to employer are as follows:

 

Engine capacity  Deemed value
Up to 1500 54,000.00
1501 to 2000 72,000.00
2001 to 3000 108,000.00
Over 3000 144, 000.00

 

Income Tax

Corporate Tax

With effect from January 1, 2020 the rate of corporate tax was reduced from 25 percent  to 24 percent.

E-commerce

With effect from January 1, 2020, Satellite TV, Radio and E-commerce operators are required to appoint a representative taxpayer who is domiciled in Zimbabwe.

Operators who supply goods and services of US500 000 and above are required to pay tax at 5 percent of the gross capital amount.

Interest on foreign loans

With effect from January 1, 2020, interest on foreign loans is limited to prevailing interbank rate.

Withholding tax on tenders

Non-resident non-executive directors are now exempt from withholding tax on tenders.

Tax on Non-Executive Directors’ Fees

With effect from 1 January 2020 the tax on Non-executive Directors’ Fees is no longer allowable as a credit against tax payable. It is now a final tax.

IMTT (Intermediated Money Transfer Tax)

With effect from January 1, 2020, the tax free threshold has been increased from ZWL 20 to ZWL 100

Maximum tax payable per transactions by corporates increased from ZWL 15 000 to ZWL25 000

Development partners accredited in terms of the Privileges and Immunities Act, (Cap 3.03) is exempt from IMTT with effect from January 1, 2020.

Mining Royalties

Mining royalties are payable in foreign currency.

The rate of mining royalties for diamonds reduced from 15 percent from 10 percent.

Black granite now subject to royalties at the rate of 2 percent.

Youth Employment Tax Incentive (YETI)

A tax credit ZWL500 per month per employee up to a maximum of ZWL60 000 per year of assessment is allowable to taxpayers that satisfy the following conditions:

The company should be registered for Personal Income Tax and compliant for the preceding tax period; Tax credit will only be claimed after the additional employee has served a period of 12 consecutive months;

The minimum wage payable to new employees should be at least ZWL$2 000 per month;

The tax credit will not apply to supervisory grades, trainees, interns and apprentices; and the employees should be 30 years and below.

The tax credit will not apply to corporates with a turnover exceeding an equivalent of US$1 million.

Venture capital companies/Fund

Venture Capital companies or Funds are now exempt from Income Tax if they meet certain specified conditions.

Tax free treasury bills

Income earned by Financial Institutions from Treasury Bills that are endorsed “Tax free” is exempt from Income tax with effect from 24 November 2014.

Claiming of capital redemption allowances by miners

Mining companies can claim capital redemption allowances for tangible or intangible property in the form of computer software used in Mining operations.

My Taxes, My Duties: Building my Zimbabwe!!

Disclaimer: This article was compiled by the Zimbabwe Revenue Authority for information purposes only. Zimra shall not accept responsibility for loss or damage arising from use of material in this article.

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