Our take on the Zimbabwe Mid – Term Budget Review

Fiscal interventions to try and boost the economy and encourage productivity and revenue consolidation were put in place on 16 July 2020 by Finance Minister and these are:

  1. Tax Relief Measures  

PAYE Tax-Free Threshold

Tax free threshold has been raised from ZWL $2000 to ZWL $5000 per month. The highest marginal rate is 40% for above $100 000

Tax Exemption on Risk Allowance Earned by Frontline Health Personnel

COVID-19 Risk Allowances payable to this category of employees are exempted from tax for a period of twelve (12) months commencing from 1 April 2020

Incentives for the Victoria Falls Securities Exchange (VFSE) and Investors

Government’s plan to launch the Victoria Falls Securities Exchange, with a view to attract critical offshore capital to the economy

As part of the incentive package to facilitate establishment and full operationalisation of the exchange the following incentives for the Victoria Falls Securities Exchange and investors:

• Exemption from Corporate Income Tax for the VFSE;

• Exemption from Capital Gains Withholding Tax on disposal of shares listed on the VFSE

• A lower rate of 5% on dividends payable to non-resident investors on the VFSE.

Allowable Deductions on Health Related Donations

A number of corporates have demonstrated a lot of goodwill and sacrifice by donating various goods and services to strengthen the health delivery system and social support framework.

The maximum allowable deduction on donations by corporates to the local currency equivalent of US$100 000.

Tax Exemption on University Infrastructure Projects

In order to support university infrastructure development initiatives by the Infrastructure Development Bank of Zimbabwe (IDBZ), exempt from Income Tax, specified Student Accommodation Projects

with effect from 1 January 2021. The exemption will be granted subject to fulfilling prescribed conditions.

Tax Exemption on Domestic Tourists Accommodation

The hospitality industry is one of the sectors most affected by the Covid-19 pandemic, hence it is essential for Government to take a leading role in supporting revival of the sector. Domestic tourist accommodation will be exemption from VAT with effect from 1 August 2020

2. Revenue Enhancing Measures

Payment of IMTT on Foreign Currency Transactions

Current legislation exempts the transfer of money into and from Nostro foreign currency accounts from intermediated money transfer tax. Intermediated Money Transfer Tax will be extended to cover foreign currency transactions. For the avoidance of doubt, transactions conducted by organisations accredited in terms of the Privileges and Immunities Act (Chapter 3:03) remain exempt from IMTT.

Tax Free Threshold and Maximum Tax Payable per Transaction

In line with market conditions, Intermediated Money Transfer Tax (IMTT) free threshold has been reviewed from ZWL $100 to ZWL $300 with the free threshold extended to foreign currency transactions not exceeding US$5. The maximum tax payable per transaction by corporates has been reviewed from ZW$25 000 to ZW$50 000 on transactions with values exceeding ZW$2 500 000 and maximum tax of US$ 2 000 for foreign currency transactions with a value exceeding US$ 100 000.

Value Added Tax Recording of Electronic Transactions

In order to mitigate risk on fiscal revenue, as well as enhance transparency, all VAT Registered Operators to configure Fiscal Devices to capture all transactions in the currency of trade and also produce the respective invoice in the tendered currency.

Duty Exemption on Donations of Vehicles to Government by Development Partners

Exemption from customs duty, donated single and double cab trucks, in support of Approved Projects undertaken by Government Ministries and Departments.

3. Tax Administration

 Border Post Enhancement

The surge in traffic volumes has created opportunities for smuggling of goods. In order to curtail smuggling activities, ZIMRA has been empowered to introduce Anti-Smuggling Surveillance Drones at both designated and undesignated entry points.

Excise Duty on Fuel

In order to create a balance between optimal revenue collection and affordability of fuel, there is now an Automatic Excise Duty Adjustment Mechanism that reviews excise duty on a monthly basis to levels determined through a designated formula, with effect from 1 August 2020.

4. Customs Duty Exemption on Top Dressing Fertiliser

Top dressing fertilisers of 120 000 metric tonnes on accredited dealers for the 2020-21 summer cropping season will be exempted

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