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The Zimbabwe 2019 Mid-Term Fiscal Policy Review

The Honourable Mthuli Ncube, Minister of Finance and Economic Development, presented the 2019 Mid-Term Fiscal Policy Review Statement on Thursday (MTFP), 1 August 2019 with the theme “Building a Strong Foundation for Future Prosperity”.

This summary includes the key changes from the 2019 Mid-Term Fiscal Policy Review Statement as confirmed in the Finance Act No 2 of 2019 which was gazetted into law on Wednesday 21 August 2019. We have also included a summary of other key existing tax provisions. 

This document expresses the views of KPMG and should not be interpreted as tax advice. You are encouraged to seek specific tax advise based on your requirements.

Key highlights include:

  • Repealing of the Indigenisation Act allowing foreign investors to own greater than 51% of businesses in diamond and platinum sectors. A new Act, the Economic Empowerment Act, will replace the Indigenisation Act.
  • No changes were made to rebase capital allowances in respect of capital investment made in US$ prior to the introduction of the ZW$.
  • Revision of Pay As You Earn (PAYE) tax table effective 1 August 2019, including separate US$ and ZW$ tax tables. We also highlight the current inconsistency between the tax tables as gazetted (max rate of 45%) and those available on the ZIMRA website as at 30 August 2019 (max rate 40%).
  • The ZW$60,000 VAT registration threshold and the annual tax free bonus threshold for employees of ZW$1,000 remain unchanged.
  • The introduction of 2% royalties for small scale gold miners and a floating rate between 3% and 5% for large scale miners.
  • Mining royalties will be tax deductible, however, only effective from 1 January 2020.
  • Excise Duty on fuel, tobacco and alcohol products have been increased.
  • Capital Gains Tax for immovable property acquired before 22 February 2019 to be computed at 5% on the gross selling price or assessed value.
  • IMTT capped at ZW$15 000 for transactions above ZW$750 000.