Zimbabwe - Income Tax | KPMG | GLOBAL

Zimbabwe - Income Tax

Zimbabwe - Income Tax

Taxation of international executives

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Tax returns and compliance

When are tax returns due? That is, what is the tax return due date?

Employees earning income from one source throughout the year are not required to file a tax return. In all other cases returns have to be filed by 30 April of the subsequent tax year. Specifically, within four months after the end of the year of earning. 30 April following year.

What is the tax year-end?

31 December.

What are the compliance requirements for tax returns in Zimbabwe?

Where applicable, the returns should be filed by 30 April of the year following year of operation.

Residents

Taxed on income from a Zimbabwean source.

Non-residents

Taxed on income from a Zimbabwean source.
 

Tax rates

What are the current income tax rates for residents and non residents in Zimbabwe?

Residents        

  Filling Status        Tax rate on income in bracket
From USD To USD               USD Percent
0 3600 0 0

 Aids Levy equal to 3% of the basic tax also payable.

Income tax rates for 2016: Employees

Income tax rates for 2016: Employees

Aggregate annual income is taxed as follows:

US $ 0-3,600 0%
  3,601-18,000 20%
  18,001-36,000 25%
  36,001-60,000 30%
  60,001-120,000 35%
  120,001-180,000 40%
  180,001-240,000 45%
  240,001+ 50%
Add Aids Levy: 3% of tax
Head of Household
  0 0%
Single
  0 0%
Gains on immovable assets and marektable securities sold 20%
Qualified dividends (dividends from domestic corporations, and certain foreign corporations) 15%

Non-residents

same as above.

Residence rules

For the purposes of taxation, how is an individual defined as a resident of Zimbabwe?

Aggregate presence in Zimbabwe exceeding 183 days per calendar year.

Is there a de minimus number of days rule when it comes to residency start and end date? For example, taxpayer can’t come back to the host country for more than 10 days after their assignment is over and they repatriate.

No.

What if the assignee enters the country before their assignment begins?

Assignee can enter the country as a tourist but will not be allowed to carry out any work until all the conditions have been fulfilled.

Termination of residence

Are there any tax compliance requirements when entering or leaving the country?

Assignee should seek and obtain a tax clearance from the Zimbabwe Revenue Authority.

Departure Tax

Non

What if the assignee comes back for a trip after residency has terminated?

Come back, as a tourist.

Communication between immigration and taxation authorities

Do the immigration authorities in Zimbabwe provide information to the local taxation authorities regarding when a person enters or leaves Zimbabwe?  

Yes

Filing requirements

Will an assignee have a filing requirement in the host country after thety leave the country and repatriate? 

It is possible if the assignee continues to earn income from a Z|imbabwean source, for instance rental income from immovable property situated in Zimbabwe.

 

Economic employer approach

Do the taxation authorities in Zimbabwe adopt the economic employer approach to interpreting (Article 15) of the OECD treaty? If no, are the taxation authorities in Zimbabwe considering the adoption of this interpretation of economic employer in the future?

No

De minimus number of days

Are there a de minimus number of days before the local taxation authorities will apply the economic employer approach?If yes, what is the de minimus number of days? 

No

Types of taxable compensation

What categories are subject to income tax in general situations? 

Remuneration and benefits and trade income.

Tax-exempt income

Are there any areas of income that are exempt from taxation in your country? If so, please provide a general definition of these areas.

Income that is specifically provided to be exempt in the legislation.

Retirement pension accruals to persons over fifty five years of ageThe first US$3 000 of rental income accruing to persons over fifty five years of age.

Contributions, subject to a maximum annual threshold are deductible.

Expatriate concessions

Are there any concessions made for expatirates in your country?

Non useless apperoved by the Minister of Finance and is legislated

Salary earned from working abroad

Is salary earned from working abroad taxed in Zimbabwe? If so, how?

Not taxable

Taxation of investment income and capital gains

Are investment income and capital gains taxed in your country? If so, how?

Yes, investment income is taxable at an effective rate of 25.75 percent (being 25% plus 3% aids levy) while capital gains on specified assets are taxable at 20 percent.

Dividends

15 percent if from an unlisted entity and 10 percent if from a listed entity if accuring to a taxpayer other than a local company. 

Interest

Bank interest is subject to withholding tax of 15 percent, other interest is taxed at 25 percent plus 3% Aids Levy.

Rental income

25 percent plus 3% Aids Levy.

Gains from stock option exercises

Taxed as employment income.

Residency status Taxable at:
  Grant Vest Exercise
Resident N/Y Y N/Y
Non-resident N/Y Y N/Y

 

Principal residence gains and losses

Taxable at normal business rates and losses deductible.

Capital losses

Not deductible, but scrapping allowances may be available.

Personal use items

If provided by employer, benefit taxable.

Gifts

Depending on nature, exempt and not deductible.

Foreign property reporting

Not required.

Non resident trusts

Taxable from income earned from Zimbabwean source.

Additional capital gains tax (CGT) issues and exceptions

Are there capital gains tax exceptions in your country? If so, please discuss.

No, there are no additional capital gains tax issues in Zimbabwe.

 

Pre-CGT assets

Not applicable.

Deemed disposal and acquisition

Yes, certain proceeds are deemed such as insurance proceeds per Capital Gains Tax Act.

General deductions from income

What are the general deductions from income allowed in your country?

Expenses and losses to the extent to which they are incurred in the production of income, excluding capital expenses per section 15 of the Income Tax Act (Chapter 23:06).

Tax reimbursement methods

What are the tax reimbursement methods generally used by employers in your country?

Through the final deduction system of administering employee’s tax; which is the responsibility of the employer. However where the taxpayer has filed a tax return, then reimbursement would be through an assessment.

Calculation of estimates/prepayments/withholding

How are estimates/prepayments/withholdings of tax handled in your country? For example: Pay-As-You-Earn (PAYE), Pay-As-You-Go (PAYG), and so on.

Pay-as-you-earn (PAYE) withholding

Employer required administering deduction from employee remuneration on a monthly basis.

When are estimates/prepayments/withholding of tax due in your country? For example, monthly, annually, both, and so on.

Monthly by the 10th of the following month

Relief for foreign taxes

Is there any Relief for Foreign Taxes in your country? For example, a foreign tax credit (FTC) system, double taxation treaties, and so on?

Yes, subject to a maximum relief which does not exceed the Zimbabwean tax chargeable on the same income.

General tax credits

What are the general tax credits that may be claimed in your country? Please list below.

  • Medical expenses credit: 50 percent of the aggregate amount not recoverable from a medical aid society.
  • Elderly person’s credit.
  • Blind person’s credit.

Sample tax calculation

  2009USD

2010USD 2011USD
Salary 30,000 30,000 30,000
Bonus 3,000 3,000 3,000
Cost-of-living allowance 2,400 2,400 2,400
Housing allowance 1,200 1,200 1,200
Company car 1,800 1,800 1,800
Moving expense reimbursement 1,000 1,000 1,000
Home leave 1,000 1,000 1,000
Education allowance 2,000 2,000 2,000
Interest income from non-local sources 500 500 500
Pension contributions (5,400) (5,400) (5,400)

Calculation of taxable income

Year ended 2009USD 2010USD 2011USD
Days in Zimbabwe 0 0 0
Earned income subject to income tax      
Salary 30,000 30,000 30,000
Bonus 3,000 3,000 3,000
Cost-of-living allowance 2,400 2,400 2,400
Net housing allowance 1,200 1,200 1,200
Company car 1,800 1,800 1,800
Moving expense reimbursement 1,000 1,000 1,000
Home leave 1,000 1,000 1,000
Education allowance 2,000 2,000 2,000
Total earned income 42,400 42,400 42,400
Other income 0 0 0
Total income 42400 42400 42400
Standard deduction 0 0 0
Pension contribution (5,400) (5,400) (5,400)
Moving expenses reimbursement (1,000) (1,000) (1,000)
Personal exemptions (400) (400) (400)
Bonus 0 0 0
Total taxable income 35,600 35,600 35,600

Calculation of tax liability

  2009USD 2010USD 2011USD
Taxable income as above 35,600 35,500 35,500
Zimbabwe tax 6,953 10,538 10,589
Alternative minimum tax 0 0 0
Less:      
Foreign tax credits 0 0 0
Total federal income tax 0 0 0
Social security tax  0 0 0
Total Zimbabwe taxes 6,953 10,538 10,589

2015 and 2016

Total Taxable income 42,400.00
Maximum pension contributions (5,400.00)
Bonus exemption (1,000.00)
Taxable income 36,000.00
Tax 7,380.00
Aids Levy 221.40
  7,601.40

Other assumptions

Calculation of taxable income

Year-ended

2016

USD

2015

USD

2014

USD

Days in Zimbabwe during year 365 365 365
Earned income subject to income tax      
Salary 100,000 100,000 100,000
Bonus 20,000 20,000 20,000
Cost-of-living allowance 10,000 10,000 10,000
Housing allowance 12,000 12,000 12,000
Company car 6,000 6,000 6,000
Moving expense reimbursement 0 0 0
Home leave 0 5,000 0
Education allowance 3,000 3,000 3,000
Total earned income 151,000 156,000 151,000
Investment income 6,000 6,000 6,000
Total income 157,000 162,000 157,000
Deductions 0 0 0
Total taxabe income 157,000 162,000 157,000

Calculation of tax liability

Taxable income as above 157,000 162,000 157,000
Income tax (federal and provincial) thereon 50,644 52,499 50,368
Less:      
Non-refundable tax credits 8,480 8,579 8,065
Total income tax 42,165 43,920 42,303
Employee contribution to Pension Plan 2,356 2,426 2,480
Employee contribution to Employement Insurance (EI) 891 914 931

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