Legal and Tax Analysis of the Draft of Road Motor Transportation (Electronic Hailing Services) General Regulations 2026

Overview.

We dive into legal and tax analysis of the draft of Road Motor Transportation (Electronic Hailing Services) General Regulations, 2026 (“the Draft Regulations”) in light of existing Zimbabwean statutory frameworks. The primary tax enactments considered are the Income Tax Act [Chapter 23:06], the Finance Act [Chapter 23:04], and the Value Added Tax (VAT) Act [Chapter 23:12], alongside provisions governing administrative roles under the Revenue Authority Act [Chapter 23:11].

Statutory Context and Inter-Legislative Harmony

The Draft Regulations seek to introduce a structured compliance architecture across four principal market actors:

1. Accredited Platform Providers (Software operators / digital intermediaries)
2. E-Hailing Vehicle Operators (Vehicle owners)
3. E-Hailing Drivers (Individuals driving the vehicles)
4. Passengers (End-users)

Part VII (Revenue Compliance) of the Draft Regulations interacts extensively with primary national tax laws. Crucially, Section 25(2) of the Draft Regulations affirms the doctrine of ultra vires and statutory hierarchy by stating that nothing in the regulations purports to create a tax independently, recognizing that under Section 152 & Section 282(2) of the Constitution of Zimbabwe, taxes may only be levied under the direct authority of an Act of Parliament.

Analysis of Tax Obligations by Actor

A. Accredited Platform Providers (Part II & Part VII)

1. Corporate Income Tax (CIT) & Income Allocation

• Statutory Requirement: Section 25(1)(a) mandates registration with ZIMRA for Income Tax purposes.
• Domestic Entities: Companies incorporated in Zimbabwe under the Companies and Other Business Entities Act [Chapter 24:31] are subject to corporate tax on worldwide/taxable income under Section 7 & 14 of the Finance Act [Chapter 23:04] (standard corporate rate of 25% plus 3% AIDS Levy, effectively 25.75%).
• Foreign Platform Providers: Foreign-incorporated platforms operate via a Local Representative (Section 6(2)(b) & 6(3)).
  • Taxability & Source Rule: Under Section 12 of the Income Tax Act [Chapter 23:06], income is taxed if derived from a source within or deemed to be within Zimbabwe. Section 2(2) of the Draft Regulations deems platforms accessible/used in Zimbabwe as operating in Zimbabwe.
  • Joint & Several Liability: Section 6(3) imposes joint and several liability on the local representative for all statutory obligations, creating a local tax-enforcement nexus for non-resident platform owners.

2. Value Added Tax (VAT) & Digital Services

• Statutory Requirement: Section 25(1)(a) & Section 25(1)(c) require VAT compliance.
• Imported Services & Non-Resident Suppliers:
  • Under Section 13A of the VAT Act (read with Section 25(1)(c) of the Regulations), non-resident suppliers of digital, platform-mediated services providing transport-hailing tools to local users are subject to VAT on imported digital services or Digital Services Withholding Tax.
  • Where applicable, the general rate of VAT set under Part I of the Schedule to Chapter IV of the Finance Act [Chapter 23:04] applies (15.5%).

3. Tax Agency & Mandatory Withholding (Section 26(2))

• Under Section 26(2), where the Commissioner-General appoints a platform provider as an Agent under the Income Tax Act or VAT Act, the platform provider must withhold specified taxes directly from gross earnings/fares before remitting the net amount to operators or drivers.
• Statements detailing these deductions must be supplied monthly pursuant to Section 33(4).

B. E-Hailing Vehicle Operators (Part III & Part VII)

1. Presumptive Tax Compliance

• Statutory Base: Section 36C of the Income Tax Act [Chapter 23:06] read with Section 22C of the Finance Act [Chapter 23:04].
• Prescribed Rates: Under Section 22C(1)(c) of the Finance Act, operators of taxicabs for the carriage of passengers for hire or reward (seating $\le 7$ passengers) are subject to a Presumptive Tax of US$35 per month per taxicab (or local currency equivalent at official rates under Section 22C(2)).
• Regulatory Compliance Lever (Gating Mechanism):
  • Section 11(2)(b) & Section 14(g) require operators to hold a valid Tax Clearance Certificate (ITF263) or Presumptive Tax Clearance Certificate.
  • Section 19(1)(b) & Section 26(1) prohibit platform providers from activating or maintaining an active status for any vehicle/operator lacking a valid tax clearance certificate.
  • Section 30(1)(b) mandates swift deactivation within 24 hours upon receipt of a non-compliance notice from the Commissioner-General.

E-Hailing Drivers (Part IV & Part VIII)

1. Income Classification

• Drivers operating as independent contractors (under written agreements with vehicle operators pursuant to Section 14(b)) derive taxable income from trade/investment.
• Where a driver is an employee of a fleet operator, the operator must deduct Pay As You Earn (PAYE) in terms of the Thirteenth Schedule to the Income Tax Act and Section 14(2)(a) of the Finance Act.

2. Deduction Caps & Net Pay Transparency

• Section 33(1) caps platform service fees/commissions at 18% of the fare (excluding VAT and road user charges).
• Section 33(2) prohibits non-statutory deductions from driver payouts, restricting allowable deductions to:
  1. Platform commission ($\le 18\%$).
  2. E-hailing road user charge.
  3. Tax withheld under agency appointments (Section 26(2)).
  4. Contractually agreed fees disclosed under Section 6(4)(g).

Statutory Charges vs. Statutory Taxes

A. E-Hailing Road User Charge (Section 29 & Second Schedule)

• Nature: This is a statutory user levy, not a tax.
• Legal Authorization: Promulgated pursuant to express enabling powers under Section 52(2)(g) & Section 52(2a) of the Road Motor Transportation Act [Chapter 13:15].
• Mechanism: Collected per trip by the platform provider via automated fare deduction and remitted by the 10th of each month directly to ZINARA for deposit into the Road Fund.
• Enforcement: Failure to remit creates a civil debt recoverable by ZINARA (Section 29(4)) and triggers vehicle/operator deactivation (Section 30(1)(c)).

B. Regulatory & Licensing Fees (First Schedule)

• Mandatory administrative fees (in USD or local currency at prevailing interbank rates under Section 39(2)) cover:
  • Accreditation Application & Renewal.
  • Vehicle Licence Endorsements & Identification Discs.
  • Driver Permits & Detention Release Fees.

Administrative Data Access & Fiscalisation

+-----------------------------------------------------------------------+
|                       PLATFORM PROVIDER (API)                          |
|  - Real-time trip logging & time-stamped location tracking            |
|  - Automatic identification disc & tax clearance status checks       |
+-----------------------------------+-----------------------------------+
                                    |
            +-----------------------+-----------------------+
            |                                               |
            v                                               v
+-----------------------+                       +-----------------------+
|  ZIMRA ACCESS (API)   |                       |  ZINARA ACCESS (API)  |
| - Read-only trip data |                       | - Monthly returns     |
| - Fiscalised receipts |                       | - Per-trip user fees  |
| - Tax agency checks   |                       | - Road Fund remittance|
+-----------------------+                       +-----------------------+

1. Fiscalised Receipts (Section 27):
   • Where a platform or operator meets registration thresholds under the VAT Act, all receipts issued electronically upon trip completion must qualify as fiscalised receipts (tax invoices generated through a fiscal device or data management system).
2. Real-Time Data Integration (Section 28(2)):
   • Platform providers must grant ZIMRA and the Ministry secure, read-only API access to trip records and monthly transactional returns within 90 days of accreditation.
   • Provides ZIMRA with verifiable electronic data to audit gross revenue, commission splits, and presumptive tax compliance.

Potential Legal Vulnerabilities & Recommendations

1. Constitutional Overreach (Ultra Vires Risk):
   • As highlighted in Drafter’s Note #2, regulating digital platform providers under Section 52 of the Road Motor Transportation Act (which traditionally governs vehicle usage on roads) poses an arguable constitutional challenge under Section 134 of the Constitution.
   • Recommendation: Enact the primary Road Motor Transportation Amendment Bill to grant explicit statutory authority for platform licensing and higher penal structures.
2. Agency Appointment Alignment:
   • Section 26(2) correctly omits specific section citations for agency appointments. ZIMRA must formally issue agency notices under the relevant provisions of the Income Tax Act and VAT Act to legally enforce platform withholding duties.