Tax treatment for income accruing from business operations in Zimbabwe.

To deduce what constitute business income, we need to define trade.The term business has the same meaning with the term trade.

A “trade” is defined in terms of the Act as including any profession, trade, business, activity, calling, occupation or venture, including the letting of any property, carried on, engaged in or followed for the purposes of producing income and anything done for the purpose of producing such income.

It is anything that occupies an individual’s time, attention, and labour for the purpose of making a profit. An individual may not be operating an active business with obvious income-earning activities, but the underlying intent of transactions may be trade for profit.

General business Income.

Business income is income arising under the general concept of a business, e.g. revenue from sale of goods or services. It includes, but is not limited to the following incomes:

• • revenue from sale of goods or services,
  • income from property letting-rent,
  • interest received by a bank or a money lending firm,
  • income arising from share dealing,
  • income arising out of isolated transaction or undertaking connected with the business,
  • income arising out of “Extraordinary” transactions,
  • realization of investments by investment/ insurance companies,
  • receipt for temporary loss of fixed asset,
  • income a compensation for cancellation or loss of trading or commercial contract,
  • compensation received from a tenant upon the premature termination of tenancy,
  • recovery of previously deducted amounts,
  • prepayments- advance payments and deposits
  • interest chargeable on receivables
  • recoupment,
  • lease premium,
  • lease recoupment,
  • creditors concessions,
  • trading stock in farming,
  • foreign exchange,
  • subsidies and grants,

Business income is taxed at 24% plus 3% Aids levy, bringing to an effective rate of 24.72%.