The taxation system in Zimbabwe is based on the source. When income is obtained or deemed to be gotten from a country-based source, it is subject to tax. It has been indicated that there might be a switch from a source-based system to a residence-based during the next tax reform exercise.
Persons required to pay tax
A source of income is said to be a place where revenue is obtained or received from. This doesn’t include the place of payment. If a person sells goods in line with a contract entered within the country, the origin of such revenue is agreed to be the state, irrespective of the point of unlading or title transfer. It is safe to say that the source of services is the location where the said services were rendered.
Sometimes, interest, dividends, and certain copyright royalties obtained abroad may be perceived to be sourced in the country if they are owned by a tax resident.
Types of Taxes
There are several types of taxes charged within the territory. Personal income tax is levied on the salary earned by employees working in the country. Corporate income tax is charged on revenue or profits earned while doing business in the state.
Personal income tax
This applies to money earned by employees of an organization. The tax brackets only apply to employment income.
| Annual taxable income (ZWL) | Rates of tax |
| 0 to 300,000 | 0% |
| 300,001 to 720,000 | 0 + 20% for ZWL above 300,000 |
| 720,001 to 1,440,000 | 84,000 + 25% for ZWL above 720,000 |
| 1,440,001 to 2,880,000 | 264,000 + 30% for ZWL above 1,440,000 |
| 2,880,001 to 6,000,000 | 696,000 + 35% for ZWL above 2,880,000 |
| 6,000,001 and above | 1,788,000 + 40% for ZWL above 6,000,000 |
| Annual taxable income ($)) | Tax Rates ($) |
| 0 to 1,200 | 0% |
| 1,201 to 3,600 | 0 + 20% for each $ above 1,200 |
| 3,601 to 12,000 | 480 + 25% for each $ above 3,600 |
| 12,001 to 24,000 | 2,580 + 30% for each $ above 12,000 |
| 24,001 to 36,000 | 6,180 + 35% for each $ above 24,000 |
| 36,001 and above | 10,380 + 40% for each $ above 36,000 |
Corporate income tax
This type of tax is taxed at a fixed rate of 24 percent. It applies to all income derived from business or payments of rent. However, the only business carried out within is deemed to be source-based. When foreign businesses gain profits from activities deemed to be within, they will be subjected to paying taxes in Zimbabwe. It is important to know that all foreign entities have to register their branches provided they hope to carry out business activities here.
The corporate income tax (CIT) rate for companies aside from mining companies with special mining leases, including branches was reduced to 24.72% from 25.75% in 2020. This includes the standard rate of 24 percent and a 3 percent AIDS levy.
Other types of Taxes
The other types of taxes levied are:
AIDS levy
AIDS levy charged at 3 percent of the tax liability is added to the gross tax liability calculated. With this levy, the top employment income tax rate changed from 46.35 percent to 41.20 percent likewise the top rate for other income amounted to 24.72 percent.
Income earned has to be subjected to tax except if an exemption is provided.
Circumstances of a transaction should always be considered to determine whether the transaction gives rise to taxation in Zimbabwe.
Withholding tax
For persons residing temporarily and who do not possess a place of business here, withholding tax (WHT) is charged.
Local income taxes
Local income taxes are not charged here.
