Zimbabwe 2024 MidTerm Budget Tax Review

On the 25th of July 2024, the Minister of Finance presented the Midterm budget with the “theme” “CONSOLIDATING ECONOMIC TRANSFORMATION”.

Highlights of the 2024 Economic Midterm Budget Statement.

On the global economic developments, the IMF expects the global economy to grow by 3.2%. The positive growth
prospects will be fueled by higher economic activity in advanced economies.

Tight monetary policies, movements on the labour market and declines in prices of energy across the world are
expected to lead to a fall in inflation. General prices of goods and services are expected to fall by 0.9% to 5.9% in 2024 from 4.5% projected in October 2023.

Global commodity prices are expected to decline in 2024. The World Bank projects a decline of the commodity price index by 2.5% in 2024, compared to 2023.

The domestic economy is now expected to grow by 2% in 2024, 1.5% below the 2024 National Budget growth projection of 3.5%. The downward revision is attributed to the severe impact of the El-Nino induced drought on agriculture output, as indicated by the Second Round Crops, Livestock and Fisheries Assessment.

Highlights of the 2024 Midterm Budget Tax Proposals.

• Payment of certain taxes in foreign currency except QPD’s w.e.f from 1 August 2024.

  • With effect from the 1st August, 2024, any such person who remits quarterly instalments of tax in terms of section 72,and which estimates provisional tax on the basis that it will earn 50% or more of its income in foreign currency in the year of assessment concerned, shall, subject to subsection (12), remit to the Zimbabwe Revenue Authority half of such quarterly payment in local currency at the official closing rate of exchange for the day previous to the day on which the payment is remitted.
  • Only applies to payment of Provisional tax (QPD’s)
  • Taxpayers to note the Delta vs ZIMRA case of Section 4A of Finance Act.
  • Taxes are paid in the currency of trade except the above provision.

• Automated Financial Transactions Tax.

  • for each withdrawal above the local currency equivalent of one hundred United States dollars, a local currency equivalent of zero comma zero five United States dollars.”.
  • Thus withdrawal charges for ZiG equivalent of $100, will equal 0.05% of that ZiG withdrawn amount.

• Presumptive tax

  • With effect from the year of assessment beginning on the 1st January, 2024, the following changes have been effected.

• Registration of Self Employed Persons with ZIMRA and have a Tax Clearance.

With effect from the year of assessment beginning on the 1st January, 2025, the following self-employed persons shall comply with section 37C.

1. architects registered or required to be registered under the Architects Act.
2. engineers or technicians registered or required to be registered under the Engineering Council Act
3. legal practitioners registered or required to be registered under the Legal Practitioners Act
4. health practitioners registered or required to be registered under the Health Professions Act
5. real estate agents registered or required to be registered under the Estate Agents Act.

• Year of Assessment  (ITF16) for the period 2024.

  • the year of assessment beginning on the 1st January, 2024, in respect of the taxable income from employment of a person other than a company, a trust or a pension fund, consists of the following two periods.
    • the period beginning on the 1st January, 2024, and ending on the 4th April, 2024;
    • the period beginning on the 5th April, 2024, and ending on the 31st December, 2024.”.

• Bonus Exemption Threshhold.

  • The Third Schedule to the Income Tax Act is amended in paragraph 4 by the deletion in paragraph (o) of “seven
    million five hundred thousand dollars” and the substitution of “seven hundred United States dollars or the local currency equivalent thereof at the time of payment of the bonus or the performance related award.

• Capital Gains Tax rates changes

  • With effect from the 28th June, 2024, and for a period of six months, section 39 is amended—
    • by the repeal of paragraph (a) and the substitution of—
      • sale of a marketable security that is a listed security now attracts 2%.
      • the amount so withheld shall be considered to be the final tax.
      • a sale of a marketable security other than a security referred above, will attract tax of 5%.

• Value Added Tax changes

  • Deferment of collection of tax on capital goods.

  • With effect from the 1st January, 2024, the following have been made by the commissioner
    • for Deferment of collection of tax on capital goods, a person shall
      • produces proof to the satisfaction of the Commissioner that he or she has imported goods of a capital nature for his or her own use.
      • the Commissioner is satisfied, from a scrutiny of the Commissioner’s own records, that the person is compliant with his or tax obligations under this and any other revenue Act.
    • the Commissioner shall authorise a deferment of payment of tax on such goods for a pre-scribed period not exceeding one hundred and eighty days from the date on which the goods are.

• Intermediated Money Transfer Tax

  • The changes are as.