In Zimbabwe’s tax framework, a Tax Credit is a powerful incentive for corporates. Unlike a tax deduction (which only reduces the amount of income subject to tax), a tax credit is a dollar-for-dollar reduction of the actual income tax you owe. While many business incentives come in the form of “Tax Holidays” or “Capital Allowances,” there are two specific Employment-Based Credits that corporates can use to directly lower their final tax bill.
1. Youth Employment Tax Incentive (YETI)
Introduced to combat youth unemployment, the YETI allows qualifying businesses to claim a credit for hiring additional employees under the age of 30.
The Benefit
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Monthly Credit: US$50.00 (or ZiG equivalent) per month for each additional young employee.
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Annual Cap: The total credit for all qualifying employees cannot exceed US$2,250.00 per year.
Conditions for Eligibility
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Business Size: This credit is specifically for small-to-medium enterprises. It is not available to companies with an annual turnover of US$1 million or more.
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Employee Definition: The employee must be an additional hire (not a replacement) and must be aged 30 years or younger at the time of engagement.
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Waiting Period: The credit can only be claimed after the employee has completed 12 consecutive months of service.
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Exclusions: You cannot claim this for trainees, interns, apprentices, or managerial staff (including supervisors).
2. Tax Credit for Employment of Physically Disabled Persons
To promote inclusive hiring practices, ZIMRA provides a credit to businesses that employ physically challenged individuals.
The Benefit
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Monthly Credit: US$50.00 (or ZiG equivalent) per month for each additional disabled employee.
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Annual Cap: A maximum of US$2,250.00 per year of assessment.
Conditions for Eligibility
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Medical Proof: The employer must provide medical reports from a Government Hospital certifying the nature and degree of the disability.
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NSSA Compliance: The corporate must be fully compliant with all National Social Security Authority (NSSA) regulations.
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Service Period: Like the YETI, the credit is claimable only after the employee has served for 12 consecutive months.
How to Claim Corporate Tax Credits
The process for claiming these credits is designed to be self-regulatory, meaning you do not need to apply for approval beforehand.
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QPD Computations: You can factor these credits into your Quarterly Payment Dates (QPDs) to reduce the amount of provisional tax you pay throughout the year.
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Self-Assessment: Report the credits on your ITF 12C (Self-Assessment Return) at the end of the tax year.
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Timing: If an employee is engaged on January 1st, you can claim the credit in that same tax year. If they are engaged on any other date, the credit is only claimable in the following year of assessment (once the 12-month rule is met).
Important Rules
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No Cash Refunds: If your tax credit exceeds the tax you owe, ZIMRA will not refund the difference.
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Carrying Forward: If you have a “Payable Position” but the credit is larger than the tax, the excess can be carried forward to the next year.
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Assessed Losses: If your company has an assessed loss, the credit is added to that loss, which is then carried forward to offset future taxable profits.
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Compliance: You must be tax-compliant for the preceding year of assessment. If you are on a payment plan for old taxes, you must be adhering to it to qualify for new credits.
