- 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%.
- Mining Exploration: Expenditure incurred before production starts is deductible in full in the first year of production. Subsequent development expenditure is written off in the year expended.
- Goodwill: Currently, goodwill is not deductible for tax purposes in Zimbabwe.
- Start-up Expenses: These may be deducted if incurred within 18 months of business commencement and are not considered capital in nature.
- Interest Expenses: Zimbabwe has thin capitalization rules based on a 3:1 debt-to-equity ratio. Disallowed interest is treated as a deemed dividend and subjected to a 15% withholding tax.
- Bad Debt: Bad debts written off may be claimed, but provisions for bad debts are not deductible.
- Charitable Contributions: Donations to specified charities and educational bodies may be claimed, subject to varying maximum limits.
- Entertainment Expenses: These are not deductible for tax purposes.
- Fines and Penalties: These are not deductible for tax purposes.
- Taxes: Generally, taxes are not allowed as a deduction against income unless they form part of an allowable expense.
- Net Operating Losses: Assessed tax losses may be carried forward for up to six years, provided the company continues to trade. This restriction does not apply to mining companies.
- Payments to Foreign Affiliates: Deductions for management and general administration expenses, as well as interest, are limited for branches or subsidiaries of both local and foreign companies.
Corporate Deductions
02/09/2025