Businesses are liable to register with ZIMRA as soon as they start trading. Income Tax , one of the tax heads the business is liable to register. After registering with ZIMRA, business is issued a Business Partner Number (BPN). Most taxpayer often ask question about Income Tax.
The article is going to explain what constitute income for a business. For the computation of taxable income to be performed, it has to meet the definition of gross
income in terms of the Income Tax Act. The key requirement for income to be taxed in Zimbabwe is that it has to be from a source or deemed source within Zimbabwe. This is known as the “source-based” taxation system.
Income Tax.
Income Tax is a tax on a person (including a juristic person) in respect of his income during a tax year. Taxable income, is total income reduced by total of any deductible allowances.
“Income” includes any amount chargeable to tax under the ACT, any amount subject to collection or deduction of tax and any loss of income but does not include, in case of a shareholder of a company, the amount representing the face value of any bonus share or the amount of any bonus declared, issued or paid by the company to the shareholders with a view to increasing its paid up share capital;
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- Any amount chargeable to tax under this ordinance
- Any amount subject to deduction and collection under various sections of this ordinance.
- Any loss of Income.
Scope of Income/Concept
- Receipt of Income may be
- On Cash Basis as well as
- In kind
- Deemed Income at par with real income
- Cash Basis vs Accrual Basis
- Illegal Income
- Lump Sum Receipts
- Tax-free income
- Income can not be taxed twice, if not expressly mentioned otherwise
- Charge on Person
- Certain Incomes excluded from Taxable Income (exemptions).
- Lump Sum Receipts
- Tax-free income
- Income cannot be taxed twice, if not expressly mentioned otherwise
- Certain Incomes excluded from Taxable Income (exemptions)
Income tax in Zimbabwe is levied at 24%, plus Aids levy, which gives an effective rate of 24.72%.
