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Zimbabwe: Tax measures proposed in 2020 budget

Zimbabwe: Tax measures proposed in 2020 budget

The national budget for 2020, presented on 14 November 2019, includes proposals concerning the corporate income tax, value added tax (VAT), capital gains tax, certain indirect and excise taxes, among other provisions.

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In general, the tax measures proposed in the budget for 2020 have an effective date of 1 January 2020. In some instances, however, there are specific effective dates.

Among the tax measures proposed in the budget for 2020 are the following items:

Concerning corporate tax:

  • A marginal reduction of the corporate tax rate from 25% to 24%
  • Disallowable excess interest on foreign loans to be computed using the highest interbank rate
  • Withholding tax on non-executive directors fees to be final and not subject to a claimable tax credit
  • Conditions to be introduced for venture capitalists to qualify for an income tax exemption

Concerning VAT and indirect taxes:

  • A marginal reduction of the VAT standard tax rate from 15% to 14.5%
  • An increase in the VAT registration threshold (from ZWL60,000 to ZWL1,000,000)
  • A requirement for foreign radio and television broadcasters and e-commerce service providers rendering services to Zimbabwean residents to account for VAT
  • VAT on imported services claimable as input tax
  • The definition of payee under withholding taxes related to section 80 for contracts and tenders to exclude a non-resident person liable to pay the withholding taxes for fees, remittances, royalties and non-resident non-executive director
  • An increase in the excise tax on cigarettes (effective 1 December 2019)
  • Concerning customs duty, the value of goods imported expressed in a currency of a given foreign country, will be converted to the Zimbabwean dollar (ZWL) selling rate for that foreign currency
  • Duty-free importation of LED solar lights and home lighting kits

Mining-related items:

  • Capital redemption allowance for miners to include expenditure on tangible and intangible computer software
  • Royalties on diamonds reduced from 15% to 10%
  • Royalties on black granite and cut or uncut dimensional stone introduced (effective from 23 February 2019)

Concerning the intermediated money transfer tax (IMTT):

  • Tax-free threshold increased from ZWL20 to ZWL100
  • The maximum IMTT reviewed from ZWL15,000 to ZWL25,000 for transactions exceeding ZWL1,250,000
  • Clarification of the obligation to pay IMTT with the person undertaking the transaction, and not the financial institutions that are required to withhold and remit the tax to tax authority (note that this is in a budget statement but not in the bill itself)
  • IMTT exemption to include transfers by development partners accredited in terms of the Privileges and Immunities Act, with effect from 1 January 2020

Other measures:

  • The capital gains tax on marketable securities assumed to be in foreign currency unless documentary proof provided to confirm sale in ZWL


Read a November 2019 report [PDF 518 KB] prepared by the KPMG member firm in Zimbabwe

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