A structured legal and tax analysis of Non‑Residents’ Tax on Fees (NRTF) in Zimbabwe, covering how it arises, applicable rates, statutory framework, key definitions, exemptions, compliance obligations, penalties, and leading court decisions, synthesising the material you provided into a coherent doctrinal overview suitable for professional, academic, or advisory use.
1. Nature and Charging Provision.
Non‑Residents’ Tax on Fees is a withholding tax imposed on certain payments made to non‑resident persons for services sourced in Zimbabwe.
Charging section
- Section 30 of the Income Tax Act [Chapter 23:06]
- Read together with the Seventeenth Schedule
- Tax is imposed at the rate fixed in the annual Charging (Finance) Act
The tax is:
- Final tax in most instances
- Collected at source by the payer or agent
2. How the Tax Arises
The tax arises when all the following elements are present:
- A payment of “fees”
- From a source within Zimbabwe
- Paid or payable to a non‑resident person
- In respect of technical, managerial, administrative or consultative services
Source rule
- Fees are deemed to be from a source within Zimbabwe if the payer is ordinarily resident in Zimbabwe
- Irrespective of where the services are physically rendered
📌 Authority
- Sunfresh Enterprises (Pvt) Ltd v ZIMRA 04‑HB‑078
- Standard Chartered Bank Zimbabwe Ltd v ZIMRA 18‑SC‑023
3. Rate of Tax
- The rate is fixed by the Charging Act
- The rate is 15%
- Withheld on the gross amount of fees
4. Definition of “Fees”
Statutory definition
Under paragraph 1 of the Seventeenth Schedule:
“Fees” means any amount from a source within Zimbabwe payable in respect of any services of a technical, managerial, administrative or consultative nature.
Judicial interpretation
- “Any amount” is interpreted widely and purposively
📌 Zimasco v ZIMRA 16‑HH‑149
What is excluded
- Commissions paid to agents
- Sunfresh Enterprises v ZIMRA 04‑HB‑078
- M Coy (Pvt) Ltd v ZIMRA 16‑HH‑661, upheld on appeal 21‑SC‑098
The courts consistently distinguish fees for services from pure agency commissions.
5. Non‑Resident Person
A non‑resident person includes:
- An individual not ordinarily resident in Zimbabwe
- A partnership or foreign company
- Excludes entities operating in a Special Economic Zone (SEZ)
📌 Definition substituted by Finance Act (effective 1 January 2017)
6. Export Market Services (EMS)
Introduced by Finance (No.3) Act 11 of 2014, effective 1 January 2015
Meaning
Services rendered wholly or exclusively for:
- Seeking markets outside Zimbabwe
- Promoting exports
Includes:
- Market research
- Advertising outside Zimbabwe
- Soliciting business outside Zimbabwe
- Tender preparation
- Bringing foreign buyers to Zimbabwe
Key case law
- M Safaris (Pvt) Ltd v ZIMRA 20‑HH‑331
- M Coy (Pvt) Ltd v ZIMRA 21‑SC‑098
Limitation
- Exempt where agent fees ≤ 5% of FOB export value
7. Statutory Exemptions from NRTF
Fees do not include payments in respect of:
| Exemption | Authority |
|---|---|
| Personal services unconnected with business | Statute |
| Employee services (non-directors) | Statute |
| Education or training | Statute |
| Repairs outside Zimbabwe | Statute |
| Ministerially specified projects | GN 122/2015 |
| Government treaty projects (pre‑2024) | Repealed & substituted |
| SEZ‑licensed investors | Finance Act 2/2017 |
| Industrial park developers | Statute |
| Export market services | Finance Act 11/2014 |
| Non‑executive director fees | 33rd Schedule |
📌 Project-specific exemptions
- Zambezi River Authority – Kariba Dam
- Hwange Electricity Supply Co
- Konoike Construction Co (SI 47/2019)
8. Deemed Payment Rules
Fees are deemed to be paid when:
- Credited to the payee’s account; or
- Conditions entitling the payee are fulfilled
🚫 Exchange control approval is irrelevant
📌 Cases:
- Barclays Bank of Zimbabwe v ZIMRA 04‑HH‑162
- Standard Chartered Bank Zimbabwe Ltd v ZIMRA 18‑SC‑023
9. Withholding Obligations
Payer’s duty (Paragraph 2)
- Withhold tax
- Remit to ZIMRA within 10 days
- Issue a withholding certificate
Agent’s duty (Paragraph 3)
- Applies where payer failed to withhold
- Agent deemed liable if payment delivered via their address
📌 G Bank Zimbabwe Ltd v ZIMRA 15‑HH‑207
(automatic offshore bank charges did not constitute fees)
10. Payee’s Residual Liability
If neither payer nor agent withholds:
- The non‑resident payee must pay the tax within 10 days
11. Penalties and Interest
Penalty for failure to withhold or remit
- 100% of the tax unpaid
- Personal liability on payer or agent
📌 Cases:
- LFCZ Ltd v ZIMRA 19‑HH‑164
- E (Pvt) Ltd v ZIMRA 22‑HH‑010
Waiver
- Commissioner may waive penalty if no intent to evade
Interest
- Interest charges upheld unless expressly repealed
📌 Air Zimbabwe Corporation & Others v ZIMRA 03‑HH‑096
12. Refunds
- Refund allowed if tax overpaid
- Claim must be made within 6 years
📌 Leading cases:
- Standard Chartered Bank Zimbabwe Ltd v ZIMRA 18‑SC‑023
- Mota Engenhari Construction SA v ZIMRA 22‑SC‑115
13. Leading Supreme Court Authority
Mota Engenhari Construction SA v ZIMRA 22‑SC‑115
Key principles:
- Purpose‑based interpretation of NRTF
- Focus on substance over form
- Confirmed ZIMRA’s powers on withholding and refunds
14. Conclusion
Non‑Residents’ Tax on Fees is a strict, source‑based withholding regime designed to:
- Secure Zimbabwe’s taxing rights over imported services
- Shift compliance to local payers and agents
- Prevent base erosion via offshore service fees
Zimbabwean courts have:
- Adopted a purposive interpretation
- Carefully distinguished fees vs commissions
- Upheld ZIMRA’s enforcement powers, subject to fairness and statutory exemptions
