ZIMBABWE Law and Practice Contributed by: Nellie Tiyago and Rudo Magundani, Scanlen & Holderness
pensation (including payments made and owed) and associated tax deductions. For the purposes of determining PAYE, employment income includes gross remuneration, which in turn includes salaries and professional fees, fringe ben - efits (including complimentary use of company assets and employer-funded benefits), allowances and sub - sidies (subject to business expense deductions), the imputed value of employer-provided housing and the imputed value of company vehicle usage. Taxation of Residents As highlighted earlier, the tax system in Zimbabwe is source-based. For tax purposes, residents are obli - gated to pay tax on income derived from services provided within Zimbabwe, notwithstanding the con - tract’s execution location. For any service rendered or work or labour done as an employee, by a person temporarily outside Zimbabwe for a period of less than 183 days, such income shall be deemed to be Non-residents also pay income tax for services ren - dered in Zimbabwe. Such employee may be exempt from the payment of taxes in Zimbabwe if their employ - ment or service was for a period of less than 183 days, and if there is a DTA between the relevant countries. Tax liability commences upon contract signing for expatriate employees and consultants providing ser - vices in Zimbabwe. Relevant double tax treaty (DTT) terms must be applied to determine tax obligations. An employer may seek exchange control approval for foreign employees whose services were rendered in Zimbabwe, to be paid via foreign accounts. However, the Income Tax Act, as read with the Finance Act, requires that where employees’ salaries are paid in foreign currency, the concomitant tax obligation must be remitted in foreign currency. Special Circumstances in Which Income is Deemed to Have Accrued Income shall be deemed to have accrued to a person notwithstanding that such income has been invest - ed, accumulated or otherwise capitalised by him or her; has not actually been paid over to him or her but remains due and payable; or has been credited to an from a Zimbabwean source. Taxation of Non-Residents
account or re-invested, accumulated or capitalised – or otherwise dealt with – in his or her name or on his or her behalf. Partnership Income Income received by, or accrued to or in favour of, a partnership in any period ending on an account - ing date shall be deemed to be income received by, or accrued to or in favour of, the partners on such accounting date in the proportions in which the part - ners agree to share the profits of the partnership on such date. Capital Gains Tax CGT is levied on capital gains arising from the disposal or deemed disposal of a specified asset from a source within Zimbabwe. The principal legislation governing the raising of a tax on capital gains is the Capital Gains Tax Act. Specified assets include immovable property (eg, land and buildings) and any marketable security (eg, debentures, shares, unit trusts, bonds and stock). With effect from 1 January 2017, the definition of specified assets was expanded to include any right or title to tangible or intangible property registered, or required to be registered, in accordance with mining and intellectual property laws. The seller is responsi - ble for the payment of CGT. Rates of CGT Where the specified asset being disposed of/sold was acquired after 1 February 2009, CGT is chargeable at a rate of 20% of the capital gain. Where the specified asset being disposed of/sold was acquired before 1 February 2009, CGT is chargeable at a rate of 5% of the gross capital amount realised from the sale. Special capital gains On 1 January 2024, the Finance Act, 2023 (No 13 of 2023) introduced a special CGT, which provides that special CGT is now chargeable on the transfer of a mining title. The special CGT on the transfer of a min - ing title shall be payable at a rate of 5% of the value of the transaction concerned. No registration of the acquisition of a mining title can be executed if the special CGT on the transfer thereof has not been paid. CGT exemptions apply to asset transfers between spouses, reconstruction/merger schemes approved
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