The ManicaPost
On 14 November 201, 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 1st January, 2019, and ending on the 31st July, 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 1 November 2019, the tax free performance award/bonus portion was increased from ZWL1 000 to ZWL5 000.
Retrenchment Package
With effect from 1 January 2020 the tax free threshold has been raised from ZWL 10,000.00 to ZWL ZWL50, 000.00 or one third of the package up to a maximum of ZWL 80,000.00.
Motoring Benefits
With effect from 1 January 2020 motoring benefits based on deemed cost to employer are as follows:
Income Tax
Corporate Tax
With effect from 1 January 2020 the rate of corporate tax was reduced from 25% to 24%.
E-commerce
With effect from 1 January 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% of the gross capital amount.
Interest on foreign loans
With effect from 1 January 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 1 January 2020, the tax free threshold has been increased from ZWL 20.00 to ZWL 100.00
Maximum tax payable per transactions by corporates increased from ZWL 15,000.00 to ZWL25, 000.00
Development partners accredited in terms of the Privileges and Immunities Act, [Cap 3.03] is exempt from IMTT with effect from 1 January 2020.
Mining Royalties
Mining royalties are payable in foreign currency.
The rate of mining royalties for diamonds reduced from 15% from 10%.
Black granite now subject to royalties at the rate of 2%.
Youth Employment Tax Incentive (YETI)
A tax credit ZWL500.00 per month per employee up to a maximum of ZWL60,000.00 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.
Transfer Pricing
Transfer Pricing Methods are no longer specified.
Capital Gains Tax
Where specified assets are disposed in foreign currency, or the seller fails to provide documentary evidence of local currency transaction, tax on the gross capital amount shall be paid in foreign currency.
VAT
With effect from 1 January 2020 the VAT standard rate has been reduced from 15% to 14 ½ %.
Claiming of input tax
The definition of input tax has been amended to include VAT paid on imported services. This allows registered operators who have the invoice and proof of payment to claim the input tax.
VAT on goods and services supplied by Satellite, TV, Radio and E-commerce Operators
With effect from 1 January 2020 the goods and services supplied by radio, television, electronic commerce operator by a person outside Zimbabwe shall be deemed to be a supply made in Zimbabwe. This means these operators are supposed charge VAT at the standard rate of 14.5% on the supplies.
Operators are required to appoint a representative taxpayer who will be responsible to account for the tax.
VAT registration threshold
With effect from 1 January 2020, VAT registration threshold was increased from ZWL 60 000 to ZWL 1000 000.
Reward for information
With effect from 1 January 2020, whistle blowers reward excludes penalty and interest.
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 and no liability will attach to the Zimbabwe Revenue Authority.
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