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Zimbabwe
2019
National
Budget
Budget Highlights
and Tax Summary
22 November 2018
Overview
The Honourable Mthuli Ncube, Minister of Finance and Economic Development,
presented the 2019 National Budget on Thursday, 22 November 2018. The theme of
the 2019 National Budget is “Austerity for Prosperity”
This summary includes the key proposals from the 2019 Budget Statement. We have
also included a summary of key existing tax provisions.
These 2019 Budget Statement proposals are still to be promulgated into law.
The release of the Transitional Stabilisation Programme in early October 2018 provided a prelude to
the theme of policies and budget allocations expected to be proposed in the 2019 budget. The
approach proposed to address the fiscal imbalance had been set as a combination of policies to
increase revenues and reduce Government expenditures.
The introduction of the 2% Intermediated Money Transfer Tax (“IMTT”) in October 2018 was the first
step in increasing Government revenues. The “sacrifice” required by all during this stabilisation
period has certainly been felt in the private sector with the expectation of sacrifices in the public
sector through significant government expenditure containment measures.
In addition, to protect foreign investment and exporter income earnings, the formal separation of FCA
Nostro and FCA RTGS bank accounts was also announced in October 2018.
The subsequent market reaction resulted in the highest official year on year inflation figure, since
2009, of 20.85% for October 2018, and highlights the need to address the currency debate. This
includes the extent to which products continue to be subsidised by the Government and the extent to
which these subsidies are funded by the private sector, primarily through the requirement for
exporters to allocate percentages of their export earnings to the Reserve Bank of Zimbabwe and the
Banking sector at the mandated RTGS/Bond to US$ rate of 1:1.
The key policy proposals announced in the 2019 National Budget are included in this document.
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Key Changes
Revenue
measures
Clarification of tax
exemption on interest
income earned on treasury
bills
Amendments to the 2%
IMTT exemptions list
Deemed taxable income
for satellite broadcasting
services and electronic
commerce platform
providers
Reduction in employment
tax rates
Extension of joint and
severally liable tax
obligations for directors in
certain circumstances
Revision of duties and
extension in rebates in the
productive sectors Controlling
Publication of tax penalty expenditures Currency
loading model
Payment of taxes in
5% reduction in basic /Macro
salaries of senior civil
underlying currency
servants economic
Increase in excise duty for
13th cheque to be Gradual movement
fuel and cigarettes
restricted to basic salary towards a more efficient
Payment of duty in foreign and optimal foreign
Rationalisation of foreign
currency for specified currency allocation
service missions
goods including motor including establishment of
vehicles Retirement of the youth a foreign currency
officers committee
Requirement for filing
annual transfer pricing Introduction of biometric Large scale gold miners to
return and documentation register for civil servants retain 55% of foreign
in 2019 currency earned
Amendment of definition
of time of supply which Privatisation of parastals Two Bilateral Investment
will result in earlier Promotion and Protection
Management of
payment of VAT Agreements (BIPPA)
government vehicle fleet
awaiting signature and
twenty two BIPPAs under
negotiation
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3
ZIMRA to provide tax free are exempt from Exempting the Reserve
guidelines for transfer income tax.” Bank of Zimbabwe from the
pricing documentation requirement of
requirements. Satellite Broadcasting administering withholding
Services and Electronic tax on contracts in relation
Penalties for non- Platform Service Provider to interest payments
compliance with transfer accruing from Treasury Bills
pricing legislation are: “Deemed taxable during the period of
– 10% of the shortfall tax income for foreign 01/02/09 to 30/11/18.
liability where taxpayer satellite broadcasting Exemption on withholding
was in compliance with services and electronic of 10% for payments to non-
35th schedule and residents.
contemporaneous
commerce platform
transfer pricing providers” Mining
documentation. With effect from 01/01/19, With effect from 01/01/19,
– 30% of shortfall tax any amount receivable, by the definition of the capital
liability on non- or on behalf of either a expenditure has been
compliance with 35th satellite broadcasting extended to clarify that
schedule or non- service or an electronic capital expenditure claimed
existence of commerce platform located must be in respect of two or
contemporaneous outside Zimbabwe, from a more mining locations
transfer pricing person resident in which are held by same
documentation. Zimbabwe is deemed to be taxpayer and ZIMRA is
from a source within satisfied that the mining
– 100% of shortfall tax Zimbabwe and will operations conducted are
liability on tax evasion therefore be subject to tax inseparable or
and deliberate in Zimbabwe. interdependent where
postponement of tax minerals produced at these
liability where no A satellite broadcasting locations are part of
transfer pricing service provider or any integrated process of
document exist. person who delivers goods beneficiation under the
or services through an control of the taxpayer.
Voluntarily wound up electronic commerce
companies platform in receipt of
With effect from 01/01/19, revenue in excess of an
where companies are annual amount to be
voluntarily wound up to specified by the Minister
shall be required to appoint
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International, a Swiss cooperative. All rights reserved.
4
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International, a Swiss cooperative. All rights reserved.
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0 - 3 600 0% - -
120 001 - 180 000 35 580 + 40% of excess over 120 000
180 001 - 240 000 59 580 + 45% of excess over 180 000
240 001 - and over 86 580 + 50% of excess over 240 000
© 2018 KPMG Zimbabwe is a partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss cooperative. All rights reserved.
6
© 2018 KPMG Zimbabwe is a partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss cooperative. All rights reserved.
7
© 2018 KPMG Zimbabwe is a partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG
International, a Swiss cooperative. All rights reserved.
8
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International, a Swiss cooperative. All rights reserved.
10
Precious stones
Diamonds
Platinum
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International, a Swiss cooperative. All rights reserved.
11
0% first 5
years
For SEZ Corporate Income Tax rate at 0% for the first 5 years, thereafter at 15%.
thereafter
15%
Exemption for Special Economic Zone (“SEZ”) from Non-Residents Withholding Tax on 0%
Fees.
Exemption for SEZ from Residents Shareholder’s Tax and Non-Resident Shareholder’s 0%
Tax.
50% year 1
Special Initial Allowance for SEZ on capital equipment at the rate of 50% of cost in year one
there after
and thereafter 25% in each of the subsequent two years.
25%
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Automated
Non-
Dividends Financial
Entertainers executive
ZSE listed Fees and Tenders and Transaction tax
and Artists director’s
10%/Other Royalties 15% contracts 10% is charged at 5
15% fees 20%
15% cents per
transaction
transaction
Canada:
Dividends 10%
Fees 10% France: China:
Royalties 10% Dividends 10% Dividends
Fees 10% - 2.5% for companies
Royalties 10% holding at least 25%
of capital
- 7.5% for all others
Fees 15%
Royalties 7.5%
United Kingdom:
Dividends
- 5% for companies
holding at least
25% of capital
- 20% for all others
Fees 10%
Royalties 10%
Mauritius:
Dividends
- 10% for companies
holding at least 25%
South Africa:
of capital
Dividends
- 20% for all others
- 10%
Fees 10%
- 5% for companies
Royalties 15%
holding at least 25%
of capital
Fees 5%
Royalties 10%
Source: Income Tax Act (Chapter 23:06) and Finance Act (Chapter 23:04)
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International, a Swiss cooperative. All rights reserved.
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International, a Swiss cooperative. All rights reserved. 14
Imports
VAT on importation of goods
will be calculated on the value
for duty purposes plus any
duty levied in respect of the
importation of such goods.
Exports
VAT on export of
unbeneficiated chrome
remains at 20%. Export of
unbeneficiated hides is subject
to VAT at US$0.75 per kg.
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International, a Swiss cooperative. All rights reserved.
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Provisions
Specified assets acquired prior to 1/02/09 are subject to CGT at 5% on the gross proceeds. 5%
Sale of listed securities are subject to withholding tax (WHT) at 1% on the gross proceeds. 1%
Securities which have been subjected to the 1% WHT will be exempt from the normal 20%
CGT.
Immovable property acquired on or after 1/02/09 is subject to 15% WHT on gross proceeds. 20%
The WHT will be credited against the final 20% CGT on the actual capital gain on assessment.
Donations of housing units to any local authority, approved employee share ownership trust or 0%
community share ownership trust or scheme are now exempt from Capital Gains Tax.
Payment of CGT must be by no later than the 3rd working day of the date of accrual.
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Prince Vayeya
Junior Tax Consultant
pvayeya@kpmg.com
+263 242 302 600
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International, a Swiss cooperative. All rights reserved.
17
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The information contained herein is of a general nature and is not intended to address the
circumstances of any particular individual or entity. Although we endeavour to provide accurate and
timely information, there can be no guarantee that such information is accurate as of the date it is
received or that it will continue to be accurate in the future. No one should act on such information
without appropriate professional advice after a thorough examination of the particular situation.
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member firms affiliated with KPMG International Cooperative, a Swiss entity. All rights reserved.
The KPMG name and logo are registered trademarks or trademarks of KPMG International.