Introduction
Capital Gains Tax (CGT) in Zimbabwe is a critical tax affecting individuals and businesses disposing of specified assets. With recent legislative updates in 2025, including changes to interest rates on unpaid or overpaid CGT, understanding how CGT works and how to comply is essential for anyone operating in Zimbabwe’s business environment. This article provides a detailed overview of CGT in Zimbabwe, outlines the tax rates, explains recent statutory changes, and highlights key steps for formally setting up your business to ensure full tax compliance.
What Is Capital Gains Tax in Zimbabwe?
Capital Gains Tax is levied on the profit (gain) realized from the disposal of specified assets. In Zimbabwe, CGT applies to:
- Immovable property (land and buildings)
- Marketable securities (shares and bonds)
- Intangible property registered or required to be registered under Zimbabwean law
- Mining titles (subject to special CGT provisions)
CGT is chargeable on gains made from assets sold or otherwise disposed of within Zimbabwe or deemed to be within Zimbabwe.
Current Capital Gains Tax Rates (2025)
- Standard CGT rate: 20% on the capital gain realized from disposal of specified assets.
- Special CGT on mining titles: 20% on the value of the transaction involving transfer of mining titles (introduced in Finance Act No. 13 of 2023).
- CGT on immovable property sales: 15% withholding tax on the sale price.
- CGT on unlisted marketable securities: 10% rate applies.
- Assets acquired before 1 February 2009: CGT calculated at 5% of the selling price.
Recent Changes: Capital Gains Tax (Rate of Interest) Notice, 2025
Statutory Instrument 22 of 2025 introduced important changes to interest rates on unpaid or overpaid CGT:
- Interest on unpaid or overpaid CGT in local currency: Bank Policy Rate + 5%.
- Interest on unpaid or overpaid CGT in foreign currency: 10% per month.
- The Commissioner must pay interest on overpaid CGT not refunded within 60 days, unless caused by taxpayer errors.
- These changes replaced the 2022 Capital Gains Tax (Rate of Interest) Notice.
Understanding these rates is vital to avoid unexpected financial burdens related to late payments or delayed refunds.
Key Steps to Comply with Capital Gains Tax in Zimbabwe
1. Register Your Business with ZIMRA
Before dealing with CGT obligations, ensure your business is formally registered with the Zimbabwe Revenue Authority (ZIMRA). Obtain a Business Partner Number (BPN) which is required for all tax filings.
2. Maintain Accurate Records of Asset Transactions
Keep detailed records of all asset acquisitions and disposals, including:
- Purchase and sale agreements
- Valuation reports
- Dates of acquisition and disposal
- Costs incurred related to the asset (improvements, legal fees)
Accurate records are essential to calculate taxable gains correctly.
3. Calculate the Capital Gain
The capital gain is generally the difference between the selling price and the base cost of the asset, adjusted for allowable deductions such as acquisition costs and improvements.
4. File Capital Gains Tax Returns
CGT returns must be filed with ZIMRA within the prescribed deadlines. For property sales, withholding tax at 15% is deducted at the point of transfer and remitted to ZIMRA.
5. Pay Capital Gains Tax and Interest, If Applicable
Pay the calculated CGT promptly. If payment is late, interest at the revised rates (Bank Policy Rate + 5% local currency or 10% foreign currency) will apply.
Setting Up Your Business for Tax Compliance in Zimbabwe
To effectively manage CGT and other tax obligations, follow these steps when setting up your business:
- Incorporate your business through the Zimbabwe Business Registry.
- Register with ZIMRA immediately after incorporation.
- Choose the appropriate business structure (private company, public company, branch, or private business corporation).
- Implement reliable accounting and record-keeping systems to track asset transactions and tax liabilities.
- Engage qualified tax professionals to assist with CGT calculations and filings.
- Stay informed about tax law changes and statutory instruments affecting CGT.
Capital Gains Tax Exemptions and Reliefs
Zimbabwean tax law provides some exemptions and reliefs, including:
- Transfers between companies under common control may be exempt.
- Losses on disposal of specified assets can offset gains in the same tax year.
- Certain personal assets and primary residences may be exempt under specific conditions.
Consult with tax experts to identify applicable reliefs.
Consequences of Non-Compliance
Failure to comply with CGT obligations can result in:
- Heavy penalties and interest on unpaid tax
- Legal action by ZIMRA
- Reputational damage affecting business operations
- Potential audits and investigations
Timely and accurate compliance safeguards your business from these risks.
Conclusion
Capital Gains Tax in Zimbabwe is an important consideration for businesses and individuals disposing of assets. With the 2025 updates to interest rates and ongoing statutory changes, staying informed and compliant is essential. By properly registering your business, maintaining accurate records, calculating gains correctly, and filing CGT returns on time, you can avoid penalties and optimize your tax position. Effective business setup and professional tax advice are key to navigating Zimbabwe’s evolving tax landscape successfully.
