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




Returning student refers to an individual who has lived in Zimbabwe before and returns to Zimbabwe once he/she completes a course of study.

The returning students rebate on importation of motor vehicle has over the years allowed them to afford to acquire and import motor vehicles into Zimbabwe at a rational cost.

It should be noted that for the returning student to qualify for the rebate certain conditions should be met as highlighted below.


The returning student must be above the age of 16 years and should have stayed outside Zimbabwe for a period of not less than 2 years. The time of arrival also determines whether or not the student qualifies for the rebate and this can only be established from the returning student.

The first time of entering Zimbabwe by the student after completing the course of study, immigration officers will ask the returning student if he or she wishes to claim the returning student status upon arrival at any entry point. If the students wishes to claim returning students status, the immigration officer will stamp his/her passport with RR which shows that he or she is a returning resident.

The stamp concludes the student’s first occasion of entry and will determine whether or not the student can claim the motor vehicle rebate.  If the student does not import the vehicle on first occasion as above-mentioned he or she forgoes the duty rebate. 

Additionally, ZIMRA will request the returning student to produce academic transcripts, certificates or any other confirmation to ascertain that he or she has indeed completed studies.

The rebate is therefore not available to returning students who have not completed their studies for whatever reason. The vehicle must be in physical existence and fully paid for by the returning resident before the time of his arrival. Therefore if one purchases the motor vehicle after his return he or she may not enjoy the duty rebate, unless one did not declare that he has returned for good.

However, the rebate has led to the abuse by third parties importing vehicles duty-free. This abuse has resulted in the government losing out potential revenue to these 3rd parties.

To curb this risk the government has put a maximum value of US$5000 so as to qualify for the rebate. If a student imports a motor vehicle exceeding this value he/she will forego the rebate and pay the full duty on the imported vehicle.

Conclusively, the rebate has been of great importance as it benefits returning students although this move tend to result in an increase in the importation of second-hand motor vehicles which may pose environmental impacts such as emissions.

Trademark Registration Zimbabwe


What is a trademark?

It is a distinctive sign or name, which identifies certain goods or services of one producer from those of another.       

Registering a Trademark

Registration of a trade mark is done in accordance with the Trade Marks Act [chapter 26:04] and Trade Marks Regulations [2005].

First, an application for registration of a trademark must be filed with the national trademark office, which in this case is the Zimbabwe Intellectual Property Office.

The application must contain 10 clear reproductions of the mark filed for registration, including any colours, forms, devices or three-dimensional features.

The application must also contain a list of goods or services to which the mark would apply. The mark must fulfil certain conditions in order to be protected as a trademark or service mark.

It must be distinctive, so that consumers can distinguish it as identifying a particular product, as well as from other trademarks identifying other products. It must neither mislead nor deceive customers or violate public order or morality.

Finally, the rights applied for cannot be the same as, or similar to, rights already granted to another trademark owner.

This may be determined through search and examination by the Office, or by the opposition of third parties who claim similar or identical rights.

Examples of Trademarks





Registration confers legal rights to the owner of the trademark.

A trademark allows the proprietor to authorize another to use it in return for payment [licensing].

Marketing tool

Trade marks promote initiative and enterprise worldwide by rewarding the owners of the trademarks with recognition and financial profit.

Trademark protection hinders the efforts of unfair competitors, such as counterfeiters, to use similar distinctive signs to market inferior or different products or services.

The system enables knowledgeable traders to produce and market goods and services in the fairest possible conditions, thereby facilitating international trade.

Trademarks can identify the commercial source of goods or services

From the above it is good to register your trademark and M&J Consultants can assist along the way 

Cheerful team of financial managers in formalwear sitting at desk and preparing annual accounts with help of laptop, interior of open plan office on background

Tax Relief on Medical Expenses

Workers and employers sustain medical costs which negatively affect their disposable income.

To curb this burden on employees and employers, there various tax incentives on medical expenses as well as medical contributions. The tax incentives include tax credits, exemptions and deductions.

Tax exemptions and credits are only applicable to employees whereas tax
deductions are granted to employers. Tax credits refer to the amount of money that a tax payer can subtract from taxable income. It increases disposable income of a tax payer.

Basically, medical cost are categorized into two classes namely medical contributions and medical expenses.

Medical expenses refers to hospitalization cost, treatment costs, drugs as well as purchase, hire, repair of an invalid appliance or fitting. Invalid appliance should be used by taxpayer or his spouse or any child by reason of his or her mental or physical defect or disability so as to qualify for tax credits.

In the case that the employer has paid for medical expenses on behalf of the employee, he/she is granted a tax deduction for the calculation of his tax liability. To the employee, the amount paid by the employer represent a fringe benefit however the law exempts from tax this benefit in the hands of the employee.

On the other hand, an employee gets 50% tax credit in respect of medical expenses incurred by him/her for himself or herself, his/her spouse or child. Only expenditure paid in respect of prescribed drugs are granted tax credit.

The employee should forward the supporting documents such as original invoice of the incurred medical expense, which has not been recovered from any source to the employer to facilitate the claiming of the credit. The bill will be entered in the payroll and the employee’s payable tax will be reduced by 50% of that bill.

When an employer pays medical cost out of his own funds on behalf of his employees it is called a medical contribution. In Zimbabwe medical contributions are made to medical associations such as CIMAS, PSMAS and Fedelity depending on the preference of employers.

Medical contributions on behalf of employees are exempted from PAYE. When computing tax liability in the hands of the employer, medical contributions are deductible which is a benefit as this minimizes tax liability of the employer. However, it should be noted that for medical
contribution to qualify as a deduction they should be paid to approved medical aid society.

Conclusively, when an employee make a contribution to medical aid society from his disposable income he qualifies for 50% tax credit as long the contribution was made to recognized medical aid society. If one is not a permanent resident of Zimbabwe he cannot claim any medical
expense, however he can only claim medical contribution made to a medical aid society.

If the taxpayer is deceased and the estate has made any payment of medical expenses those expenses should be claimed in the person’s pre-death period of assessment.

SOUTH AFRICA - Cape Town - 09-October- 2019 - The Financial Sector Conduct Authority (FSCA) raided Dr Iqbal Survé's offices in Cape Town this morning, in what the businessman described as a "fishing expedition" and "an intimidation tactic". Management and staff said the FSCA, accompanied by police officers, pounced on the offices of Sekunjalo Holdings and African Equity Empowerment Investment (AEEI) without prior notice and tried to confiscate laptops and computer hard drives.The FSCA team arrived at Sekunjalo's offices near the V&A Waterfront saying they were probing a case of irregularly share trading against one of Survé's companies, AYO Technology Solutions.  Photographer Ayanda Ndamane/African NewsAgency (ANA)

Business Entity Incorporation Agents (Company registration agents)

Company registration work has been a profitable small specialized market for unregistered and unregulated company registration and shelf company selling “agents” for the longest time in Company administration.

Over the last 20 years most registered Companies are predicted to have been registered by agents, this includes most of the dormant companies that the office is now trying to weed out.

A new phenomenon that has been brought forth with the new Act is the introduction of the Business Entity Incorporating Agent License, any person who does business registration work which is defined as the preparation by any person for profit, of any document for registration with the Companies Office or for attestation or execution by the Registrar.) This means any Companies office filing whatsoever including the filing of

  • Annual Returns
  • the appointment as company secretary when you are not on the board of directors
  • providing a registered office or business address
  • managing a share registry on behalf of a company
  • arranging the appointment of a nominee

This type of work is now done by the traditional Legal Practitioner, Chartered Accountant, a person registered under the Chartered Accountant and Auditors Act [27:12], or is a Chartered Secretary, must now be done by a person who is registered under the Act as a Business Entity Incorporating Agent.

An individual or a company competence will be judged based on the qualification of the individual Directors of said company, An individual who in his/her personal capacity or as the Director/Chief Accounting Officer of a Company that seeks to be licensed as a Business Entity Incorporating Agent must be either:

  •  Be a qualified Public Accountant or auditor in terms of the Public Accountant and Auditors Act [Chapter 27:12]
  • Must be a holder of a Bachelor in Business Administration degree from a recognized University OR an equivalent prescribed qualification (we are still waiting for further Regulations as to what these equivalent prescribed qualifications will be but it is an intelligent guess that it will most likely be University degrees in the Commerce related disciplines

ANY agent who is not registered under this Act as of the 13th of August 2020 (within 6 months of the effective date of the Act) is not qualified nor do they have the privilege to do any business entity registration work and any prospective licence applicant who does not hold the prescribed qualifications will not qualify to be licensed as such.


Basic Functions of Accounting Systems

An accounting System – is a set of records and the procedures and equipment used to perform the accounting functions. Manual systems consist of journals and ledgers on paper. Computerized accounting systems consist of accounting software, computer files, computers, and related peripheral equipment such as printers.

Basic Functions

Interpret and record business transactions.

The records that are kept for the individual asset, liability, equity, revenue, expense, and dividend components are known as accounts Every time an organisation conducts a business transaction, the status of the account changes. Bookkeeping process keeps track of these changes in various ledgers and journals. The financial statements are then prepared using this information.

Classify similar transactions into useful reports.

Statement of financial position has 3 sections

Assets – the things of value that the company owns.

Liabilities – obligations to pay or provide goods or services at some later date.

Equity – the amount of net assets (assets – liabilities) owing to the owners of the business.The income statement – communicates the inflow of revenue, and the outflow of expenses over a given period of time.

The Cash Flow Statement – records inflows and outflows of cash during a period of time, and is divided into cash flow from operations, financing, and investing activities. 

Summarize and communicate information to decision makers. 

An accounting system is capable of generating summarized and comprehensive statistical reports that provide management or interested parties with a clear set of data to aid in the decision-making process.

An accounting system can also manage

Expenses – An automatic accounting system allows quick entry, categorisation and automatic balance of expenses.

Invoices – Some accounting systems allow for instant invoice creation with the ability to customize and automatically keep track of paid invoices and income.

Funding – All the business liabilities, whether accounts payable, bank loans taken to support the business, or mortgages, etc. An accounting system keeps track of these liabilities as payable values and automatically updates the balances as soon a payment is made and accounts are settled.



It is important for all companies to familiarize themselves with the new Companies and Other Business Entities (Chapter 24:31). The memorandum can only be altered under exceptional cases. It is vital for companies who intend to alter their memorandum to follow all procedures stipulated in the Companies Act.

Special Resolution

A special resolution may be used to alter the memorandum. A condition contained in both the memorandum and lawfully in the articles can be altered through a special resolution excluding conditions prohibited from alteration by the memorandum itself.  Moreover, a special resolution can be useful in altering the objects of the company. This is only possible when the name of the company describes the objects of the company and the objects have to be altered so that the name of the company no longer describes the objects. It is important to note that the memorandum can only be altered if the name of the company is changed accordingly in terms of section 26 (“Change of name”).

Cancellation application

Use of a cancellation application is limited to holders of not less than five per cent in nominal value of the company’s issued share capital and group of shareholders referred to in section 80 (“Group voting on amendments to memorandum”). However, the above-mentioned users should not have voted or consented in favour of the alteration.

A cancellation application has to be made within one month after the date on which the resolution altering the condition specified is made. It can be made on behalf of the persons entitled to make the application. The persons can be appointed in writing. The court can make an order in cases where the application needs amendment. The order is made so that the alteration process is done diligently.

Special Resolution-Companies exempt from using the word “Limited”

The resolution altering the company’s objects shall require notice to the Minister. If no application is made within one month, a copy of the memorandum as altered is delivered to the Registrar. However, if an application is made it will give notice of alteration to the Registrar and within one month a certified copy of the altered memorandum is delivered to the Registrar. Default in giving notice or delivering any document to the Registrar will attract a category 3 civil penalty upon the defaulting company.

In conclusion, companies will not face any challenges in altering their memoranda if they follow all procedures in the companies act. Consultancy organisations can assist companies in explaining procedures and completing the process on the organisations’ behalf.



Normally, the goods taken by the Zimra border officials under the Customs Act, 1962 are deliberately taken by the Customs department. However, in some cases where the seizure is not practicable, it may become necessary to detain the goods for investigation. The provisions for putting goods under custody are contained in Section 110 of the Customs Act, 1962.

The goods are detained for various reasons and at the instance of various agencies of the Department, such as the Directorate of Revenue Intelligence, the Directorate of Central Excise Intelligence, Narcotics Control Bureau and Directorate of Enforcement and even other agencies, like the Central Bureau of Investigation. Once an order for detention of goods is served to the owner of the goods, he cannot remove, part with, or otherwise, deal with the goods except with the prior permission of the proper officer of the Customs.

During the investigation and subsequent adjudication proceedings, if the contravention of provisions of the Customs Act, 1962 and other allied laws is established, the action is taken against the importers/ offending goods as provided in the law. Guidelines for expeditious Customs clearance/provisional release: To avoid delays in the release and minimize hardship to the trade if goods remain detained pending an investigation into any dispute in relation to assessment, customs number must have been activated.

Import/export goods are not to be detained unless prohibited as per the FTP and/ or under other allied laws. However, goods that may be prohibited for importing/exporting will depend on the following conditions;

  • Imports not complying with the specifications/conditions/requirements of various Orders/Acts (e.g. Livestock Importation Act, 1898, Prevention of Food Adulteration Act, 1954, etc.)
  • Where gross fraudulent practices are noticed and release of the goods may seriously jeopardize further investigations as also interests of the revenue. Further, any individual suspected to be prohibited in terms of quantity, value, and description will be seized for being liable to confiscation under the Customs. The Departmental officers will be held accountable for cases where detention of goods has been ordered on insufficient and weak grounds resulting in the unconditional release of detained goods in the adjudication stage itself, where importers have to suffer avoidable demurrage charges/loss by pilferage.

The Basics of Withholding Tax

A withholding tax is an amount that an employer withholds from employees’ wages and pays directly to the government. The amount withheld is a credit against the income taxes the employee must pay during the year.

Withholding tax applies to income earned through wages, pensions, bonuses, commissions, and gambling winnings. Dividends and capital gains, for example, are not subject to withholding tax. Self-employed people generally don’t pay withholding taxes; they typically make quarterly estimated payments instead.

The rate is 15% on dividends distributed by companies listed on the Zimbabwe Stock Exchange. Withholding tax can be final or non-final, when it is final no further tax or return is required from a payee. WHT is final on dividend and on interest from local financial institutions.

Three key types of withholding tax are imposed at various levels:

  • Wage withholding taxes,
  • Withholding tax on payments to foreign persons, and.
  • Backup withholding on dividends and interest.

WHTs are applicable where dividends and royalties or similar payments are declared or distributed to non-Zimbabwean residents (and Zimbabwean residents in some instances).


Dividends declared by a Zimbabwean company to a non-resident holding company will be subject to non-resident shareholders tax (NRST), a WHT. NRST is payable at a rate of 15% unless treaty relief is available. Dividends from companies listed on the Zimbabwe Stock Exchange have a rate of 10%. NRST is payable within ten days after declaration of the dividend.


WHT of 15%, calculated on the gross amount of interest, is payable on interest accruing to any person resident in Zimbabwe. This applies to interest arising from a registered banking institution or unit trust scheme. The tax withheld is a final tax, and the financial institution is responsible to withhold the tax.

Non-resident investors, however, are currently exempt from any WHT on interest.

Royalties or similar payments

WHT on royalties are payable once a Zimbabwean company pays a royalty to a non-Zimbabwean resident. WHT is levied at a rate of 15% and is payable within ten days of the date of payment. The WHT falls due upon accrual (i.e. when payable), and actual payment is not a factor.

A royalty includes payment for the use or right to use any patent or design, trademark, copyright, model, pattern, plan, formula or process, or any other property or right of a similar nature. It also includes the imparting of any scientific, technical, industrial, or commercial knowledge or information for use in Zimbabwe. The nature of the amount payable should therefore be carefully considered in order to determine whether the relevant amount represents a royalty.


Fees are defined to include amounts that are technical, managerial, administrative, or consultative in nature; costs are paid externally. There are some exceptions, but the definition is broad and brings in most costs that may be charged to a Zimbabwean person.

WHT is levied at a rate of 15% and is payable within ten days of the date of payment.

Is a penalty charged for failure to remit withholding tax on time?

Any person who fails to deduct the 10 percent withholding tax is liable for the payment of the amount due. In addition, a 100 percent penalty is also chargeable on the amount due.

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Tax incentives for Small and Medium Enterprises


With the shrinking economy, the big businesses have become overladen with taxes. It is opined that if the SMEs contributed their fair share of taxes there could be a lot of revenue that may well have been collected for the benefit of the fiscus and ultimately for the benefit of the country.

Fiscal exclusion has also been a factor influencing the lack of formalization of the SMEs. Depending on the type of registration undertaken by SME’s there are tax obligations that must be fulfilled by every business that is registered for tax purposes and this includes the SMEs. These include income tax, withholding tax, PAYE, VAT and Presumptive tax.

These obligations may be greater or lesser depending on the structuring of the business. This piece of writing aims to indicate the tax issues that may affect the SMEs.

The Tax Benefits

In Zimbabwe 10% withholding tax is deducted on local businesses to business sales (B2B) upon payment to a supplier without a valid tax clearance certificate. By virtue of formalizing tax affairs, SMEs can enjoy exemption of the 10% withholding tax on contracts with other businesses. In addition, it is now a prerequisite for most business transactions.

SMEs relationships with big businesses are unavoidable sometimes. A valid tax clearance is one of the documentation required in order to participate in most tenders, including government tenders. Therefore if you do not have a valid tax clearance you will not only suffer withholding tax on payments from customers but you could also lose business opportunities.

Further qualification for duty rebates and other import incentives are also linked to possession of a valid tax clearance. By regularizing your tax affairs, you will be entitled to claim expenses that you incur in your business.

Special Initial Allowance

SMEs even have a better capital allowance regime compared to big companies which write off capital assets against their income to reduce tax payable over three years at 50% in the first year then 25% wear and tear in the second and third year compared to 4 years of 25% per annum.

SMEs do not enjoy assessed losses which can be carried forward for six years. When making losses the law allows you to use such losses to reduce taxable income, until the losses are used up or expires the company will not pay taxes to the fiscus. The reporting of such losses can be only done by a person or company who is formally registered for taxes.

Monthly payment of provisional tax

The income Tax Act provides for payment of provisional income tax in advance on a quarterly basis. And the quarterly payments are done in instalments of 10%; 25% 30% and 35% of the provisional income tax for each of the quarters of the year.

The Income Tax Act provides that the Commissioner-General may, “on application by a taxpayer, who qualifies as a “small or medium enterprise”, permit such taxpayer to pay provisional income tax on a monthly basis, that is, one month at a time in advance.”

This facility is quite favorable and can allow for working capital management flexibility on the part of SMEs given that for most of them, their business models are quite different from those of large enterprises.

Lower rate of mining royalties

The sale of specified minerals by miners to buying agents attract a deduction of tax at rates that vary depending on the mineral being sold. Payments to small scale gold miners, popularly known as “gold panners” or “makorokoza” for gold deliveries are deducted mining royalties at a lower rate of 3% as compared to the general rate of 5% applicable to other enterprises.

The small scale gold miner should be classifiable as a “micro-enterprise” in terms of the mining and quarrying sector of the economy per the SMEs Act.

Access to funding

For SMEs to enjoy funding and fiscal inclusion, they must formalize their businesses. Formalization of the SMEs opens up the access to funding and the protection of the law. Banks and financial institutions are more likely to fund formal businesses as opposed to informal businesses.

For this they would proper books of accounts to be kept and the business to be compliant with the tax laws. Therefore a formalized SME that shows good organization and a good business track record is more likely to get the much needed funding to expand the business as opposed to an informal one.

A brilliant business idea may fail to grow because of lack of funding. Formalization can bridge this gap.


Formal SME’s that keep proper books of accounts, furnish tax returns and pay taxes are not subject to presumptive tax subject to them being in possession of a valid tax clearance.

Informal SME’s on the other hand are liable to pay presumptive tax. It is a misconception that to be registered for tax is expensive. The reverse is actually true. Withholding tax applies on turnover for lack of tax clearance, the business losses on tax opportunities such as claiming business losses when they occur and above all when the taxpayer is eventually caught the law provides for back dating of tax registration and payment of taxes from the date the person was supposed to be tax registered.

This comes along with stiff penalties and interest on late paid taxes and returns. It is wise as a business owner or company executive to gain more understanding on how to go about being tax compliant to avoid missing out on business opportunities and being on the right position for growth.