Zimbabwe Tax Snapshop - Deloitte

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As of: March 2007

Basic facts
Population 13m Inflation 1,033.5%*
Main languages English (official), Shona, Ndebele GDP per head US$322
Currency Zimbabwean dollar (ZWD) GDP growth -4.4% (2006)*
Economic communities WTO
GDP sources 17.7% agriculture, 22.9% industry, 59.4% services
*Economist Intelligence Unit estimates.

Political environment
Zimbabwe is a unitary republic. The president, currently Robert Mugabe, is head of state, elected by universal suffrage for a six-year term.

The next elections are provisionally scheduled for March 2008 (presidential) and March 2010 (legislative)

Foreign trade and investment
Exports US$1.7bn (2006)* Imports US$2.0bn (2006)*
*Economist Intelligence Unit estimates.

Leading export markets: South Africa, Switzerland, the UK and the US.

Major exports: Gold, tobacco, platinum and ferro alloys.

Business and financing
Business forms Limited liability company, branch

The limited liability company is the form of business organisation most frequently used. It is possible for a branch to be reorganised as a subsidiary company, and this is usually encouraged.

Labour environment
Unemployment rate 85% + Minimum wage Varies by sector

About one-third of workers in the formal sector are unionised.

The government-set minimum wages for agricultural and domestic workers are changing rapidly, due to the hyperinflationary situation. As of March 2007, minimums ranged from a low of ZWD 2,500 for gardeners to a high of ZWD 2,968 for Red Cross certified domestic helpers.

Taxation
Corporate tax
Main rate 30%

Resident and non-resident companies are taxed on income received in Zimbabwe or accruing from sources in Zimbabwe. The rate of tax is 30% (15% for mining companies), and an AIDS levy of 3% of income tax is payable. Lower rates of tax may apply in growth point areas and export processing zones. Dividends paid between resident companies are exempt. Foreign dividends received are taxed at a flat rate of 20%. Partnerships are not taxed as entities but the income is attributed to the individual partners.

Individual tax
Progressive rates to 47.5% for employment; flat rate of 30% for trade

Resident individuals are taxed on Zimbabwe-source income and on specific foreign income that is deemed to be from a source in Zimbabwe. Income of a non-resident is generally calculated in the same way as for residents, but an exemption is granted for certain local source interest. Dividends received from Zimbabwean companies are subject to a withholding tax of 20% (15% for dividends from listed companies). Capital gains are subject to a separate capital gains tax.

As for companies, there is also an AIDS levy of 3%.

Capital gains
Capital gains tax rate 20%

Capital gains tax is imposed on immovable property and marketable securities. The general rate is 20% but a lower rate of 10% applies to the sale of listed securities. A gain on the sale of an individualÌs residence is not charged to tax, provided the proceeds are reinvested in another residence or where the sale is by a person over 59 years of age.

Indirect tax
VAT standard rate 15%

Value-added tax (VAT) applies to most transactions at the standard rate of 15% from January 1st 2007. Zero-rated supplies include exports, basic foodstuffs, agricultural inputs, international transport and supplies of services outside of Zimbabwe. Exemptions include financial services, rental of residential accommodation, the supply of leasehold land, educational and medical services, and domestic electricity.

Registration is compulsory for businesses with an annual taxable turnover above ZWD 60m.

Tax administration and compliance
Tax year Companies: Accounting period (subject to restrictions) or calendar year; Individuals: Calendar year (accounting period for businesses)

Corporate and individual taxpayers must file an annual tax return within 30 days of notification that a return is to be made. Tax is payable in fixed instalments in advance. Employment income of individuals is taxed at source. Individuals with other types of income must submit a tax return.

Additional tax information
Withholding taxes Dividends 15% (listed securities), 20% (unlisted securities); Interest (non-residents) 10%; Royalties 20%. Rates may be lower under tax treaties.
Tax treaties Zimbabwe has concluded more than ten tax treaties.
Dividends Dividends paid to resident and non-resident individuals are taxed by withholding; dividends paid between Zimbabwean companies are exempt.
Revenue protection There is no anti-haven (CFC) legislation.
Groups There is no provision for group taxation.
Incentives Growth point areas; industrial parks; export processing zones; development projects.
Other taxes Automated financial transactions tax, Carbon tax, Intermediated money transfer tax, Customs and excise duties, Registration fees, Stamp duties, Tobacco levy, Presumptive taxes for miners and taxi operators.
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