Payroll taxes: Zimbabwe operates a pay-as-you-earn (PAYE) system called the ‘Final Deduction System’ (FDS). Employers are responsible for calculating, collecting, and paying the correct amount of PAYE to ZIMRA every month. Tax audits are conducted periodically to test payroll systems.
Branch income received or accrued from a source within Zimbabwe is taxable under normal corporate tax rules. A branch is considered an extension of its foreign head office, and therefore, fees paid to the head office cannot be deducted unless a tax treaty allows it. However, reimbursement of actual expenses may be deducted, subject to normal deduction rules. Additionally, a 15% withholding tax is imposed on payments made for head office charges. The amount of fees charged by the head office to the Zimbabwe branch is limited to a maximum of 1% of total expenditure, excluding the charge itself and any capital allowances. Exchange control regulations also limit the remittability of administration and management fees to 2% of turnover.
For assets acquired before 22 February 2019:
Taxable Income
Taxable Period: The general tax year in Zimbabwe is defined as the 12 months ending on 31 December, with possible adjustments for valid reasons. The first year of trade may have a different period to align with future year-ends.
Capital Allowances: Machinery, implements, and other articles used in income production are deductible in four equal annual allowances. Industrial buildings and hotels qualify for an initial allowance of 25% of construction cost in the year they enter service, followed by an annual allowance of 25%.
Corporate Income Tax Rate: Effective from 1 January 2024, the corporate income tax (CIT) rate for companies in Zimbabwe is 25.75%, which includes a base rate of 25% and an additional 3% AIDS levy.
Tax System
Zimbabwe is a member of the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA), which allows for preferential duty rates on imports from these regions. Additionally, goods from Namibia can be imported duty-free under the Zimbabwe-Namibia Free Trade Agreement.
Foreign consultants in Zimbabwe are taxed at business rates (25.75%) and payments to offshore consultants have a withholding tax of 15%.
Combined Operations
Employment Expenses
Tax Returns and Payments
Social Security Contributions
Tax incentives for BOOT/BOT arrangements: For the first five years, the tax rate is 0%. For the next five years, it is 15%, and thereafter, it is taxed at the normal rate.
Currently based on the source of income, not residency.
Certain transactions may attract stamp duty, and the amount payable will differ based on the nature of each transaction. Basic transactions include bonds, brokers notes for the purchase of securities, movable and immovable property, off-market share transfer instruments, and cheques. Tax advice should be obtained for major transactions to ensure correct stamp duty implications.
Transfer duty is payable based on the value of the property, with specific rates for different value ranges. For properties valued between 0 to 5,000 USD, the duty is 400 USD. For properties valued between 5,001 to 20,000 USD, the duty is 2% of the value above 5,000 USD. For properties valued between 20,001 to 50,000 USD, the duty is 3% of the value above 20,000 USD. For properties valued above 50,001 USD, the duty is 4% of the value above 50,000 USD.
Daily Tax Rates:
VAT is a transaction tax with varying implications for different transactions. Some transactions are taxed at 15.5 % or 0%, while others are exempt. Input tax deductions may be claimed under certain provisions.
Dividends: Dividends declared by a Zimbabwean company to a non-resident holding company are subject to a 15% non-resident shareholders tax (NRST), unless treaty relief is available. Dividends from companies listed on the Zimbabwe Stock Exchange have a rate of 10%. NRST is payable within 30 days after the declaration of the dividend.
Daily Tax Rates:
