World Wide Tax News Issue 53 - December 2019

2020 Budget

The Minister of Finance presented his Budget statement on 14 November 2019. Some of the proposed changes which are of international interest are as follows:

Corporate tax

The rate of corporate tax is reduced from 25% to 24% with effect from I January 2020. The AIDS levy remains at 3% of the tax payable.

E-commerce transactions

It is proposed to review the minimum threshold for non-resident persons that provide satellite broadcasting services or facilitate trade of goods and services through electronic commerce platforms from ZWL 500,000 to USD 500,000.

Current legislation allows non-resident providers of satellite broadcasting service to offset assessed losses against taxable income. It is proposed to remove the legislative reference to assessed losses in the computation of their taxable income.

Foreign companies/entities providing digital services will be required to appoint a Zimbabwean representative, within 30 days of being liable to pay tax in Zimbabwe.

Mining capital allowances

It is proposed to extend the definition of expenditure on equipment to include tangible and intangible property in the form of computer software that is acquired, developed or used by a taxpayer in connection with his or her mining operations. 

Interest on foreign loans

Interest on foreign loans in excess of interest that would have been chargeable had the interbank rate been used will not be allowed as a deduction in terms of Section 16.

Withholding tax on local payments

It is proposed to amend the definition of "Payee" for local withholding tax purposes to further exclude a non-resident person:

  1. Whose supplies of satellite broadcasting services or electronic commerce platforms are more than USD 500,000; or  
  2. Who is a non-executive director paying tax under the Thirty–Third Schedule.  The effect is that the 10% withholding tax is not deducted where they do not hold a tax clearance certificate.

Royalty on diamonds

In order to promote investment in exploration and extraction, it is proposed to review the royalty on diamond from 15% to 10% of gross revenue, with effect from 1 January 2020. 

Personal tax

Any person in Zimbabwe who earns remuneration in a currency other than that of Zimbabwe is required to pay his tax in foreign currency. No changes have been made to the PAYE tables in respect of remuneration payable in foreign currency. The table for 2020 is as follows:

Annual PAYE Table

Annual Table: 1 January 2020 - 31 December 2020

Band of taxable income (USD)

Amount (USD)

Tax rate

Tax (USD)

Cumulative Tax (USD)

       0 -      840





    841 -   3 600





  3,601 - 12,000





12,001 - 24,000





24,001 - 36,000





36,001 and above




When an employee receives remuneration partly in US dollars or partly in Zimbabwe dollars, such taxable income will be subject to PAYE using the USD PAYE tables. 

In such a situation, the ZWL amount is converted to USD at the applicable interbank rate. 

This measure is applicable retrospectively from 1 August 2019.

Deemed Motoring Benefits as follows:

It has been proposed to review Deemed Motoring Benefits as follows:

Engine Capacity

Current Deemed Benefit (ZWL)

Proposed Deemed Benefit (ZWL)

     0 - 1500cc



1,500 - 2,000cc



2,000 - 3,000cc



Above 3,000cc



Capital Gains Tax 

Taxpayers disposing of specified assets in foreign currency must pay Capital Gains Tax in foreign currency. From 1 January 2020, if there is no documentary evidence that a disposal was made in local currency, the proceeds will be deemed to have been in foreign currency.

Maxwell Ngorima

Charity Machiridza