The Corporate Altruist’s Guide: The Taxation of Donations in Zimbabwe
For most businesses in Zimbabwe, the act of giving is a double-edged sword. On one hand, Corporate Social Responsibility (CSR) is a moral and brand-building imperative. On the other, the tax treatment of these acts can be a source of significant “tax surprises” during a ZIMRA audit.
The general rule in Zimbabwean tax law is harsh: Donations are not incurred for the purpose of trade or in the production of income. Therefore, under the general deduction formula of Section 15(2)(a) of the Income Tax Act, they are prohibited. However, the legislature has carved out specific “safe harbors” where the taxman encourages generosity.
1. The Statutory Framework: Income Tax Act [Chapter 23:06]
To understand which donations are “allowable” (deductible), we must look at the specific subsections of Section 15(2). Unlike ordinary business expenses, donations are only deductible if they fall squarely into one of the following categories:
A. Health and Medical Donations [Section 15(2)(r1)]
Businesses can claim a deduction for payments made to the State or a fund approved by the Minister of Health for:
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The purchase of medical equipment.
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The construction, maintenance, or extension of a hospital operated by the State, a local authority, or a religious organization.
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The procurement of drugs for such hospitals.
The Limit: The maximum deduction is currently capped at US$100,000 (or the ZiG equivalent) per year of assessment.
B. Educational Donations [Section 15(2)(r3)]
Similar to health, donations to schools (State, Local Authority, or Religious) are deductible if used for:
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Purchasing educational equipment.
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Construction or maintenance of school buildings.
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Procurement of books and educational materials.
The Limit: Capped at US$100,000 (or ZiG equivalent) per annum.
C. Public Funds with NO Limits [Section 15(2)(r)]
There are certain “super-funds” where the law allows you to deduct the entire amount, no matter how large. These include:
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The National Scholarship Fund.
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The National Bursary Fund.
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Charitable Trusts administered by the Minister of Social Welfare or Health.
D. Other Notable Mentions
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Research Institutions [Section 15(2)(r2)]: Donations to approved higher education research bodies (Limit: US$100,000).
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Public Private Partnership (PPP) Fund [Section 15(2)(r4)]: (Limit: US$50,000).
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Destitute Homeless Persons Rehabilitation Fund [Section 15(2)(r5)]: (Limit: US$50,000).
2. The VAT Trap: Deemed Supplies in Donations
While the Income Tax Act looks at whether you can “deduct” the cost, the VAT Act [Chapter 23:12] looks at whether you have “supplied” a good.
The Problem of “Giving Stock”
If a stationery company donates 1,000 notebooks (from its trading stock) to a local school, ZIMRA views this as a Deemed Supply under Section 7.
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The business originally claimed “Input Tax” when it bought the paper and ink.
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By giving the books away, the business is no longer using them for “taxable supplies.”
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The business must “repay” the VAT to ZIMRA based on the open market value of the books.
Pro-Tip: If the donation consists of exempt goods (like maize meal or certain medicines), no VAT is triggered.
3. Comparison of Donation Types
The following table summarizes the tax “health” of various business donations:
| Donation Type | Income Tax Status | VAT Status | Max Limit (USD/Year) |
| Cash to a Church | Non-Deductible | Out of Scope | N/A |
| Medical Equipment to Govt Hospital | Deductible | Exempt (Usually) | $100,000 |
| Stock-in-trade (e.g., Laptops) | Non-Deductible | Deemed Supply (VAT Due) | N/A |
| National Scholarship Fund | Deductible | Out of Scope | Unlimited |
| Political Party | Prohibited | Out of Scope | N/A |
4. The Burden of Proof: Section 63
Under Section 63 of the Income Tax Act, the “burden of proof” that a deduction is valid lies entirely with the taxpayer. To claim these deductions, a business must possess:
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A Receipt from the receiving institution.
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A Letter of Approval from the relevant Minister (for Health or Education donations).
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Evidence that the receiver is a registered PVO (Private Voluntary Organization) or a State-linked entity.
5. Summary and Best Practices
To navigate the taxation of donations effectively, businesses should follow these three golden rules:
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Don’t Give Stock, Give Cash: Gifting physical inventory often triggers a VAT liability that outweighs the PR benefit.
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Verify the PVO Number: Many “charities” in Zimbabwe are not registered under the PVO Act [Chapter 17:05]. If they aren’t registered, your donation is 100% non-deductible.
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Target “Limitless” Funds: If a business intends to make a massive impact (over $100k), it should route the funds through the National Scholarship or Bursary funds to ensure full tax deductibility.
The Bottom Line
In Zimbabwe, the law treats most donations as a “private application of wealth” rather than a business expense. Only by strictly adhering to the specific provisions of Section 15 can a business transform its generosity into a tax shield.
