Zimbabwe: Business Environment

Company Tax

24.72% (standard 24% rate +  3% AIDS levy)

Tax Rate For Foreign Companies

Zimbabwe adopts a territorial system of taxation: income from a source within, or deemed to be within, Zimbabwe will be subject to tax in Zimbabwe unless a specific exemption is available.
A company is resident in Zimbabwe if its central management and control is situated in the country.
A 15% withholding tax is imposed on branches for any payment made in respect of head office charges. Moreover, the amount of fees charged by the head office to the Zimbabwe branch is capped at 1% of total expenses. Furthermore, the possibility to remit administration and management fees is limited to 2% of turnover.

Capital Gains Taxation

Capital gains tax has different rates: 20% of proceeds from the sales of immovable properties (5% if acquired before February 2009); 20% on unlisted marketable securities' sale proceeds (5% if acquired before February 2009); 1% on marketable securities that are listed.

Main Allowable Deductions and Tax Credits

The cost and finance charges of machinery, implements, and other articles used to produce income is deductible in four equal annual allowances. 25% of the construction cost of industrial buildings qualify for an allowance in the year they enter service, plus an annual allowance of 25% for each year following the year of construction. Start-up expenses may be deducted if incurred within 18 months from the start of activities. A portion of the overall interest may be disallowed if the 3:1 debt-to-equity ratio is exceeded. Bad debts written off may be claimed, but not a provision for bad debts. Certain donations to charities and educational bodies are also deductible (with varying limits). Entertainment expenses, fines, penalties and taxes are generally not deductible. Costs of software acquisition and development qualify for capital allowances at 25% per year over four years. A double deduction is granted on expenditure incurred to develop export markets.
Assessed tax losses may be carried forward for up to six years if the company is still active, whereas the carryback of losses is not allowed.

Other Corporate Taxes

Other taxes include: stamp duty, excise duty, property taxes are levied by cities, towns, and rural councils, transfer tax (on the acquisition value of a property, with rates varying according to the value of the property, up to 4% of the value above USD 50,000), capital gains tax, standards development fund (0.5% of their quarterly gross wage bill), workmen's compensation (from 2% to 11% according to the level of risk), training levy (1% of the gross wage bill), social contributions (4.5% of basic salary, with a salary cap of ZWL 5,000 per month). An automated financial transactions tax is imposed at a rate of USD 0.05 per transaction on transactions exceeding USD 10, including transactions initiated on mobile platforms.
A bookmaker’s tax applies to persons licensed or required to be licensed under the Betting and Totalisator Control Act. The tax is 3% of the gross monthly takings.

Other Domestic Resources

Zimbabwe Revenue Authority (ZIMRA)

Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Tax Rate

Allowable Deductions and Tax Credits

Employees may deduct contributions of up to ZWL 390,000 per year to an approved pension, retirement annuity, and National Social Security Scheme (NSSS) fund registered in the country.
Travel, entertainment, and motor vehicle expenses are deductible if the employee proves that they were incurred to produce taxable income.
Charitable contributions to registered welfare and educational institutions may be deductible.
Special exemptions and credits apply to individuals over 55 years of age.

Special Expatriate Tax Regime

The Zimbabwean tax system is currently based on the territorial system, hence the income derived or deemed to be derived from sources within Zimbabwe is subject to tax.
Non-residents who do not have a place of business in Zimbabwe may be subject to withholding tax.