Last week on Thursday, the 21st of November 2019, Zimbabwe’s Finance Minister, Professor Mthuli Ncube released the budget statement for the year 2020. The budget statement covered all of Zimbabwe’s key sectors in detail and their expected allocations for the year 2020. To keep you abreast with this development, here are some of the Zimbabwe 2020 Budget Highlights we noted from Professor Mthuli Ncube’s Presentation.
1. (Zimbabwe 2020 Budget Highlight #1) Motoring Benefits
Motoring Benefits were reviewed in relation to engine capacity starting from a minimum 0-1500cc which was proposed to ZWL$54,000.00 and a maximum above 3000cc which was proposed to ZWL$144,000.00
2. Foreign Loans
Interest expense on foreign loans be allowable as a deductible expenses to the extent that the foreign currency exchange rate on loans is determined through the inter-bank market rate with effect from 1 January 2020.
3. Excise Duty
A revision in Excise Duty on Tobacco with effect from 1 December 2019 was proposed, from ZWL$50.00 to ZWL$100.00 per 1000 cigarettes.
Immigrants Rebate which was initially put for returning students who imported cars has been reviewed to a maximum of US$5,000.00, with effect from 1 January 2020.
A youth employment tax credit has been introduced in order to support job creation. The tax credit amounts to ZWL$500 per month per employee. However , this tax credit has the following conditions;
- It has a limit of ZWL60,000.00 per year of assessment, the company should be registered for personal lncome tax and compliant for the preceding tax period
- Tax credit will only claimed after the additional employee has served 12 consecutive months, excluding trainees, interns and apprentice
- Minimum wage payable to the new employees is ZWL$2,000.00 and it does not apply to supervisory grades as well as corporates with turnover exceeding US$1 million
- The employees must be below the age of 30 at time of employment , with effect 1 January 2020
6. Salaries and Deductions
The tax-free salary threshold has been increased from ZWL$700 to ZWL$2,000 with effect from 1 January 2020. Taxable income will begin from a gross pay of ZWL$2,000.01 with a highest of ZWL50,000.00 which will be pegged at 40% tax.
Tax-free Bonus has been increased from ZWL$1000 to ZWL$5000 with effect from 1 November 2019.
Taxation of retrenchment packages has also been reviewed from ZWL$10,000.00 to ZWL$50,000.00 or one third of the package, maximum of up to ZWL$80,000.00 with effect 1 January 2020.
7. (Zimbabwe 2020 Budget Highlights #7) Taxation
This is one of the most important of Zimbabwe 2020 Budget Highlights.
The Intermediated Money Transfer Tax (IMTT) , tax-free threshold has been increased from ZWL$20.00 to ZWL$100.00 and the maximum tax payable per transaction by corporate’s from ZWL$15,000.00 to ZWL$25,000 on transactions with values exceeding ZWL$1 ,250 000.00 with effect from 1 January 2020.
The corporate income tax rate with effect from 1 January 2020 will decrease from 25% to 24%. The Commissioner General has recognized the current macroeconomic environment and will continue to excise discretion to waive interests on taxpayers with a good track record and compliance , among other considerations if the 10% Statutory Margin of error has been surpassed.
The Value Added Tax (VAT) percentage has decreased from 15% to 14.5% with effect from 1 January 2020.
In relation to VAT input tax, it was proposed that imported services in the definition of input tax will be allowed to be claimed by registered operators.
The VAT registration threshold has been increased from ZWL$60,000.00 to ZWL $1 million with effect from 1 January 2020.
(Zimbabwe 2020 Budget Highlights) Conclusion
As noted, these are some of the key highlights around the 2020 budget that may directly affect your business. You can share the other highlights with us and we can have a conversion on it.
In addition to this article covering Zimbabwe 2020 Budget Highlights, you can get a full copy of the National Budget on the Ministry’s website.