Zimbabwe operates a source-based tax system, taxing income earned within its borders regardless of the taxpayer’s residency. The Zimbabwe Revenue Authority (ZIMRA) administers tax collection, guided by key legislation including the Income Tax Act [Chapter 23:06], Capital Gains Tax Act [Chapter 23:01], Value Added Tax Act [Chapter 23:12], Stamp Duties Act [Chapter 23:09], and the Finance Act [Chapter 23:04].
Corporate Income Tax (CIT)
The standard corporate income tax rate is 25%. However, specific sectors and arrangements benefit from concessional rates:
- Build-Own-Operate-Transfer (BOOT) & Build-Operate-Transfer (BOT) Projects:
- First 5 years: 0%
- Next 5 years: 15%
- Industrial Park Developers:
- First 5 years: 0%
- Thereafter: 25%
- Manufacturing Companies Exporting Output:
- 30%–40%: 20%
- 41%–50%: 17.5%
- Over 51%: 15%
- Special Economic Zones (SEZs):
- First 5 years: 0%
- Thereafter: 15%
- Special Mining Lease Holders: 15%
An AIDS levy of 3% applies to the assessed tax liability.
Personal Income Tax (PIT)
Effective January 1, 2025, the tax-free threshold is ZWL$33,600 per annum. The revised tax bands are:
- ZWL$0 – ZWL$33,600: 0%
- ZWL$33,601 – ZWL$100,800: 20%
- ZWL$100,801 – ZWL$336,000: 25%
- ZWL$336,001 – ZWL$672,000: 30%
- ZWL$672,001 – ZWL$1,008,000: 35%
- Above ZWL$1,008,000: 40%
An AIDS levy of 3% is applicable on the total tax liability.
Capital Gains Tax (CGT)
Capital gains tax is levied on profits from the sale of specified assets within Zimbabwe. Key updates include:
- Listed Marketable Securities:
- From June 28 to December 28, 2024: Exempt from CGT.
- Effective January 1, 2025: 1% final withholding tax on sale price.
- Exemptions:
- Transfers between spouses.
- Transfers due to divorce settlements.
- Deceased estates.
- Principal private residences sold by individuals aged 55 or older.
- Proceeds used to acquire a new principal private residence.
- Transfers of business property to a company under the individual’s control.
- Donations to local authorities or approved trusts.
Withholding Tax (WHT)
Payments to non-residents attract WHT as follows:
- Dividends:
- Unlisted companies: 15%.
- Listed companies: 10%.
- Interest:
- 15% (exempt for non-residents).
- Royalties & Fees: 15%.
These rates may be reduced under applicable Double Taxation Agreements (DTAs).
Value Added Tax (VAT)
The standard VAT rate is 15%. Notable exemptions and zero-rated items include:
- Zero-Rated:
- Exports.
- Basic foodstuffs (e.g., sugar, mealie-meal).
- Agricultural inputs (e.g., fertilizers, seeds).
- Exempt:
- Medical and educational services.
- Residential rentals.
- Domestic water and electricity.
- Public transport.
From January 1, 2025, VAT on Liquefied Petroleum Gas (LPG) has been removed to promote cleaner energy usage.
Stamp Duties
Stamp duty is payable on:
- Registration of immovable property acquisitions.
- Registration of bonds.
- Brokers’ notes for marketable securities.
Rates vary based on transaction value and are withheld by the registrar during registration.
New Taxes Effective January 1, 2025
To broaden the tax base, the following taxes have been introduced:
- Fast Foods Tax: 1% on sales of items like pizzas and burgers.
- Betting Tax: 10% withholding on gross winnings.
- Plastic Carrier Bag Tax: 20% on sale value.
- Rental Income Tax: 25% on rental income from properties converted from residential to business use.
Compliance and Enforcement
The government has implemented measures to enhance tax compliance:
- Mandatory Tax Registration: Targeting sectors like car dealerships and hardware stores.
- VAT Remittance Deadline: Reduced from 25 to 15 days post-collection.
- Interest on Late Remittances: Adjusted to the Bank Policy Rate plus 5%.
Staying informed about these tax regulations is crucial for individuals and businesses to ensure compliance and optimize financial planning.
