Zimbabwe: Tax provisions in 2017 budget | KPMG | GLOBAL
Share with your friends

Zimbabwe: Tax provisions in 2017 budget

Zimbabwe: Tax provisions in 2017 budget

The 2017 budget in Zimbabwe was presented on 8 December 2016. As proposed, a definition of "permanent establishment" would be added to the income tax law, so as to capture taxation of attributable profits earned by non-residents when they are not already captured by an income tax treaty or agreement. Also, there is a proposed reduction in withholding taxes on fees paid to non-resident directors, which up to now have been subject to double taxation at an effective rate of 35%. These would only be subject to the 20% withholding tax rate.


Related content

There are proposals concerning the value added tax (VAT) zero rating for a number of staple food items including rice, margarine, cereals, maheu, pork, beef, fish, chicken and potatoes, and changes to customs duties imposed across a variety of products such as fabric; printing and packaging materials (both increased); raw materials used in soap manufacture and importation of 30,000 litres of raw wine (reduced). 


Among other tax provisions included in the 2017 budget are the following items:

  • Clarification of tax incentives to be provided to “special economic zone” entities.
  • Exemption of 15% withholding non-resident tax on fees, in respect of fees already subjected to 20% withholding taxes as non-executive directors fees
  • Reduction of presumptive taxes, but with a requirement to administer these on a monthly (not quarterly) basis
  • Restricted deductibility of management fees now to include arrangements between associated entities (not only limited to parent / subsidiary relationships)
  • Expansion of the definition of “specified assets” to be subjected to the capital gains tax
  • An exemption from capital gains tax for housing units donated to local communities or share ownership and community schemes
  • Removal of additional goods from the open general license
  • Amendment of certain goods and services to standard rated (not zero rated)
  • Moratorium on small and medium size enterprises (SMEs) with regards to potential VAT penalties


Read a December 2016 report [PDF 1 MB] prepared by the KPMG member firm in Zimbabwe

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Request for proposal