This proposal is one of the most aggressive and comprehensive compliance measures introduced by the government, aimed squarely at addressing pervasive Rental Income Tax evasion in both the formal and informal property markets. In his remarks, the Minister proposes to insert section 36R to the Income Tax Act which will require mandatory registration with ZIMRA, for all commercial and non-commercial properties where business activities are conducted; and compel property owners or managers to submit quarterly tenant registers, occupancy lists and rental schedules to ZIMRA to facilitate audit and enforcement.
Property owner or manager who fails to register and account for Rental Income Tax, as well as withholding 10% of rental income payable by informal sector operators, be subject to a penalty equivalent to the Rental Income Tax and the Presumptive Tax payable thereof, including interest. ZIMRA be empowered to temporarily close the premises used for such businesses until completion of compliance processes.
The measure leverages third-party information and imposes severe penalties to transform the landscape of rental income compliance.
🏢 Analysis of Mandatory Property and Rental Data Submission
1. The Measure: Creating a Unified Property Tax Database
The proposal mandates three key compliance requirements for property owners and managers:
| Component | Requirement | Goal |
| Registration | Mandatory ZIMRA registration for all commercial and non-commercial properties where business activities occur. | To establish a comprehensive database of properties liable for Rental Income Tax and a formal link between the property (asset) and the owner (taxpayer). |
| Quarterly Submission | Quarterly submission of tenant registers, occupancy lists, and rental schedules. | To establish a clear, documented link between the property, the owner, the tenant, and the rent amount, which ZIMRA can use for cross-verification. |
| Enforcement | Empowerment of ZIMRA to temporarily close premises for non-compliance. | To introduce a powerful, immediate, and high-impact deterrent against deliberate tax evasion. |
2. Decision Impact: Enhanced Compliance and Revenue Collection
The impact of these measures is profound, affecting landlords, tenants, and ZIMRA’s administrative efficiency.
A. Increased Rental Income Tax Compliance (Landlord Focus)
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Elimination of Secrecy: Previously, ZIMRA struggled to identify all income-generating properties. Mandatory registration and quarterly submission of tenant details (names, occupancy dates, rent paid) eliminates the cloak of secrecy that tax evading landlords rely on.
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Data Matching (Cross-Verification): ZIMRA will use the submitted schedules to cross-check against other data:
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Tenants’ Accounts: If a tenant is a registered company, ZIMRA will compare the rental expense declared by the tenant (for Income Tax deduction) against the rental income declared by the landlord. Discrepancies will trigger an audit.
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Property Registry: Registration links the property’s unique identifier to the taxpayer’s file.
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Result: The measure makes it nearly impossible for a landlord to under-declare or fail to declare rental income without a high risk of detection.
B. Collection of Presumptive Tax from the Informal Sector (Tenant Focus)
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Closing the Loophole: The most strategic part of the penalty is making the landlord liable for the Presumptive Tax payable by informal tenants who fail to comply.
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Landlord as the Collector/Enforcer: This clause forces the landlord to become ZIMRA’s compliance agent. Landlords will be compelled to ensure their informal tenants are tax-compliant, or risk paying the tenants’ tax themselves. This is a powerful mechanism to draw the informal sector into the tax net, utilizing the property owner as the leverage point.
C. Severe Penalties and Deterrence (Enforcement Focus)
The proposed penalties are designed to be punitive and dissuasive:
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Rental Income Tax due ($100): Payment of the original tax liability.
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Presumptive Tax due ($100): Payment of the tenant’s liability.
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Interest: Added to the total debt.
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Premises Closure: The ultimate deterrent. Temporarily closing a commercial property (e.g., a mall, office park, or market) immediately stops the owner’s cash flow, making the cost of non-compliance visible and immediate.
This immediate, severe, and public penalty is a major escalation of ZIMRA’s enforcement powers, signaling zero tolerance for evasion.
3. Potential Challenges
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Administrative Burden: The quarterly submission requirement will be administratively heavy for ZIMRA to process, verify, and store the vast volume of data for commercial and non-commercial properties nationwide.
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Compliance Costs: For property managers and owners, complying with quarterly submissions (registers, occupancy lists) will increase administrative costs.
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Rent Increases: Landlords may pass on the inevitable increase in tax costs (due to the cessation of evasion) and administrative costs directly to tenants, leading to higher rents for businesses and residents.
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Legal Challenges: The authority to temporarily close premises may face legal challenges regarding due process and the proportionality of the penalty, particularly if the tax liability is minor compared to the revenue loss from closure.
🎯 Conclusion
This proposal is a game-changer for property tax collection in Zimbabwe. It moves ZIMRA away from a reactive audit model towards a proactive, third-party enforcement model. By linking three key pieces of information (Landlord > Property > Tenant), making the landlord responsible for the tenant’s tax, and using premises closure as the ultimate enforcement tool, the measure creates a highly coercive environment that is expected to significantly increase revenue from Rental Income Tax and Presumptive Tax.
