Income Tax Act

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Jurisdiction

Zimbabwe

Citation

Chapter 23:06

Date

Language

English

Type

Legislation

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Income Tax Act

Chapter 23:06

Commenced on 1 April 1967
[This is the version of this document as it was from 20 February 2019 to 20 August 2019.]
[Note: This version of the Act was revised and consolidated by the Law Development Commission of Zimbabwe]

[Amended by Money Laundering and Proceeds of Crime Amendment Act, 2018 (Act 12 of 2018) on 20 July 2018]
[Amended by Finance Act, 2019 (Act 1 of 2019) on 20 February 2019]

[Acts 5/1967, 35/1967, 30/1968, 36/1969 (s. 10), 39/1969, 32/1970, 2/1971, 41/1971, 20/1972, 57/1972 (s. 34), 8/1973 (Part II), 21/1973, 23/1974, 32/1975, 38/1976, 16/1977, 27/1977, 12/1978, 23/1978, 35/1978, 22/1979, 1/1980, 11/1980, 10/1981, 15/1981, 29/1981, 55/1981, 30/1982, 32/1983, 7/1984, 24/1984, 19/1985, 12/1986, 20/1986, 17/1987, 30/1987, 4/1988, 8/1988, 16/1988, 22/1989, 10/1990, 19/1990, 21/1991, 17/1992, 12/1993, 19/1994, 4/1995, 17/1995, 23/1995, 4/1996, 10/1996, 13/1996, 17/1997, 23/1997, 29/1998, 9/1999, 14/1999, 17/1999, 21/1999, 22/1999, 6/2000, 18/2000, 22/2001, 27/2001, 15/2002, 10/2003, 16/2004, 18/2004, 29/2004, 2/2005, 8/2005, 6/2006, 12/2006, 8/2007, 16/2007, 3/2009, 5/2009, 10/2009, 3/2010, 5/2010, 8/2011, 9/2011, 4/2012, 6/2012, 1/2014, 8/2014, 11/2014, 8/2015, 9/2015, 2/2017, 1/2018. R.G.N.s 217/1970, 50/1971, 57/1971, 387/1971. SI 136/2007]AN ACT to provide for the taxation of incomes and for other taxes; and to provide for matters incidental thereto.

Part I – Preliminary

1. Short title

This Act may be cited as the Income Tax Act [Chapter 23:06].

2. Interpretation

(1)In this Act—“affiliate”, in relation to a petroleum operator, has the meaning given by subsection (4) of section thirty-two;“agent” includes—

(a)any partnership or company or any other body of persons, corporate or unincorporate, when acting as an agent; and

(b)any person declared by the Commissioner to be the agent of some other person for the purposes of this Act;

“amount”, for the purposes of the provisions of this Act relating to the determination of the gross income, income or taxable income, as defined in subsection (1) of section eight, of a person, means—

(a)money; or

(b)any other property, corporeal or incorporeal, having an ascertainable money value;

and “accrued”, “paid, “received” or any cognate expression shall, in so far as it applies to an amount as defined in paragraph (b), be construed in a sense correlative with that in which it is construed when it applies to money;“approved employee share ownership trust” means an arrangement embodied in a notarised trust deed which satisfies the Commissioner that its dominant purpose or effect is to enable employees of a company or group of companies to participate in or receive profits or income arising from the acquisition, holding, management or disposal of the stock, shares, debentures or any property, including money, of the company or group of companies concerned where—

(a)the stock, shares, debentures and any property, including money, are held in trust for the employees; and

(b)the arrangement has either or both of the following characteristics—

(i)the employees’ contributions, if any, and the profits and income out of which payments are to be made are pooled;

(ii)each employee has a right or interest, whether described as a unit or otherwise, in the stock, shares, debentures and any property, including money, held in trust for the employee, which may be acquired or disposed of under the arrangement;[definition inserted by Act 27 of 2001 and amended by Act 15 of 2002]

“assessed loss” means any amount by which the sum of the deductions to be made under Part III of this Act from the income (as defined in Part III) of any taxpayer exceeds such income;Provided that no amount received by or accruing to the taxpayer under a contract of employment shall be taken into account for the purpose of determining his assessed loss;“assessment” means—

(a)the determination of taxable income and of the credits to which a person is entitled in terms of the charging Act; or

(b)the determination of an assessed loss ranking for deduction;

and includes a self-assessment in terms of section thirty-seven A;[definition substituted by Act 12 of 2006]“associate” has the meaning in section 2A;[definition inserted by Act 1of 2014]“beneficiary with a vested right”, in relation to income the subject of a trust created by a trust instrument, means a person named or identified in the trust instrument who has at the time the income is derived an immediate certain right to the present or future enjoyment of the income;“benefit fund”, save as otherwise provided in paragraph 1 of the First Schedule, means—

(a)a scheme or fund approved by the Commissioner in respect of the year of assessment in terms of subsection (1) of section thirteen; or

(b)a fund registered or provisionally registered as a provident fund under the Pension and Provident Funds Act [Chapter 24:09];

“charging Act” means the enactment by which credits and rates of tax are fixed;“child” includes a step-child and a lawfully adopted child;“Commissioner”, subject to section three means—

(a)the Commissioner in charge of the department of the Zimbabwe Revenue Authority which is declared in terms of the Revenue Authority Act [Chapter 23:11] to be responsible for assessing, collecting and enforcing the payment of the taxes leviable under this Act; or

(b)the Commissioner-General of the Zimbabwe Revenue Authority, in relation to any function which he has been authorized under the Revenue Authority Act [Chapter 23:11], to exercise;

“company” includes any association wheresoever incorporated; “credit” means a credit to which paragraph (c) of section seven relates;“export processing zone” means any part of Zimbabwe declared in terms of the Export Processing Zones Act [Chapter 14:09] to be an export processing zone;“family taxpayer” [definition repealed by Act 18 of 2000]“farmer” means any person who derives income from pastoral, agricultural or other farming activities, including any person who derives income from the letting of a farm used for such purposes, and “farming operations” and “farming purposes” shall be construed accordingly;“holder”, in relation to a special mining lease, means—

(a)any person to whom the special mining lease has been issued or transferred under the Mines and Minerals Act [Chapter 21:05]

(b)any person who is a tributor under a tribute agreement approved in terms of the Mines and Minerals Act [Chapter 21:05] in relation to all or part of the special mining lease area;

and, in relation to a year of assessment, includes a person who is or was such a holder at any time in that year;“income derived from mining operations” means income derived from a particular mining location;[definition inserted by Act 18 of 2000]“income from trade and investment”, in the case of income received by or accruing to a person other than a company or trust, means any part of the income of such person which is received by or accrues to him from any trade, investment or other activities, but does not include income from employment;[definition inserted by Act 18 of 2000]“income the subject of a trust to which no beneficiary is entitled” means income the subject of a trust created by a trust instrument which—

(a)is not paid to or applied to the benefit of—

(i)a beneficiary with a vested right; or

(ii)a person who would but for—

(A)the conferment on the trustee by the trust instrument of a discretion so to pay or apply the income; and

(B)the happening of some event stipulated in the trust instrument other than the exercise of that discretion;

be a beneficiary with a vested right;

(b)is not income deemed by virtue of section ten to have been received or have accrued to or in favour of the person by whom the trust instrument was made; or

(c)is not accumulated in terms of the trust instrument for the future benefit of a beneficiary with a vested right;

“individual” means a person other than a company;“industrial park” means any premises or area which is approved by the Minister by statutory instrument and in which two or more persons, independently of the industrial park developer, carry on the business of—

(a)manufacturing or processing goods for export from Zimbabwe; or

(b)manufacturing or processing components of goods which are intended for export from Zimbabwe;

“industrial park developer” means a person who owns and maintains an industrial park;“insolvency” and “insolvent” shall be construed in accordance with any law relating to insolvency and as including an assignment with creditors made in terms of that law;“investment licence” means an investment licence issued in terms of the Special Economic Zones Act [Chapter 14:34] (No. 7 of 2016), to a licensed investor with a qualifying degree of export-orientation, and “licensed investor” shall be construed accordingly;[definition substituted by Act 2 of 2017]“law” means an enactment as defined in the Interpretation Act [Chapter 1:01];“lawful minor child”, in relation to a taxpayer, means a lawful child of the taxpayer who—

(a)was under the age of seventeen years on the last day of the immediately preceding year of assessment; or

(b)is born in the year of assessment; or

(c)was under the age of twenty-five immediately prior to the commencement of the year of assessment and receives during any part of the year of assessment full-time instruction as a student at any educational institution;

“licensed investor” means the holder of an investment licence;“LIBOR” means the London Interbank Offered Rate referred to in section 97A(2) and (3);[definition inserted by Act 5 of 2009]“local authority” means—

(a)a city or municipal council, town council, local board or rural district council; or

(b)any body declared by the President to be a local authority for the purposes of the Interpretation Act [Chapter 1:01] which is not a body or authority referred to in paragraph (a);

“marriage” means—

(a)a marriage solemnized within Zimbabwe in accordance with any law relating to the solemnization of marriage; and

(b)a marriage solemnized outside Zimbabwe in accordance with the laws or customs relating to the solemnization of marriage of the country in which the marriage is solemnized;

(c)a marriage contracted according to customary law, notwithstanding that the marriage may not have been celebrated or solemnized in terms of any law relating to marriage:

and “married”, “husband” and “wife” shall be construed accordingly;“married woman” means a woman married with or without community of property who is not a woman referred to in paragraph (c), (d) or (e) of the definition of “spouse”;“medical aid society” means any society or scheme which is approved by the Commissioner in respect of the year of assessment in question in terms of subsection (2) of section thirteen;“mineral” includes any valuable crystalline or earthy substance forming part of or found within the earth’s surface and produced or deposited there by natural agencies but does not include petroleum or any clay (other than fire-clay), gravel, sand, stone (other than limestone) or other like substance ordinarily won by the method of surface working known as quarrying;“mining location” means a mining location registered as such in terms of the Mines and Minerals Act [Chapter 21:05];[definition inserted by Act 18 of 2000]“mining operations” means—

(a)any operations for the purpose of winning a mineral from the earth; and

(b)any operations for the purpose of winning a mineral from any substance or constituent of the earth which are carried on in conjunction with operations referred to in paragraph (a) by the person carrying on those operations; and

(c)such operations for the purpose of winning a mineral from any substance or constituent of the earth which are not carried on in conjunction with operations referred to in paragraph (a) or by a person carrying on those operations as the Commissioner may determine to be mining operations for the purposes of this Act;

and “mine”, whether used as a noun or a verb, shall be construed accordingly;“Minister” means the Minister of Finance or any other Minister to whom the President may, from time to time, assign the Administration of this Act;“minor child” means a child who is under eighteen years of age and is unmarried; “near relative” means—

(a)a lineal ascendant of an individual, including a step-father or step-mother; or

(b)a child or a lineal descendant of an individual other than a child; or

(c)a brother, half-brother, step-brother, sister, half-sister, step-sister, uncle, aunt, nephew or niece of an individual; or

(d)the adopter or adopters of an individual; or

(e)the spouse of a relative of an individual referred to in paragraphs (a) to (d);

“nominee”, in relation to an individual, means a person who—

(a)holds shares in a company, directly or indirectly, on behalf of the individual; or

(b)can be required to exercise voting powers in the affairs of a company in accordance with the directions of the individual;

“parent” includes a person liable at law to maintain a child; “pension fund” means—

(a)a fund established by any law for the purpose of providing, amongst other things, annuities or pensions on superannuation or retirement; or

(b)a fund registered or provisionally registered as a pension fund or retirement annuity fund under the Pension and Provident Funds Act [Chapter 24:09];

“period of assessment” means any period within the year of assessment in respect of which tax is to be charged, levied or collected in terms of this Act;“person” includes a company, body of persons corporate or unincorporate (not being a partnership), local or like authority, deceased or insolvent estate and, in relation to income the subject of a trust to which no beneficiary is entitled, the trust;“petroleum” means any naturally occurring hydrocarbon or any naturally occurring mixture of hydrocarbons, whether in a gaseous, liquid or solid state, and includes crude oil and natural gas but does not include hydrocarbons obtained from coal by destructive distillation or in any other way;“petroleum agreements” means an agreement between the Government and any person to whom a petroleum special grant has been or is to be issued, incorporating terms and conditions of that grant;“petroleum operations” means—

(a)exploration in Zimbabwe with a view to detecting the existence of deposits of petroleum;

(b)the appraisal of reservoirs, the preparation of wells for production, the development of producing facilities and the extraction of petroleum, whether or not those operations are carried on in conjunction with operations such as are referred to in paragraph (a), and any preliminary treatment of such petroleum for the purpose of purification and stabilization of the petroleum extracted in order to facilitate transport of such petroleum from the site of the petroleum operations;

(c)the disposal of petroleum obtained from operations referred to in paragraph (b);

“petroleum operator” means a person that is, for the purposes of Part XX of the Mines and Minerals Act [Chapter 21:05], the grantee of a petroleum special grant and, in relation to a year of assessment, includes a person who was or is such a grantee at any time in that year;“petroleum special grant” means a special grant issued under Part XX of the Mines and Minerals Act [Chapter 21:05] authorizing the grantee to win petroleum on terms and conditions included in the grant pursuant to a petroleum agreement;“prescribed” means, unless otherwise provided, prescribed by the Commissioner;“previous law” means the Income Tax Act, 1954 (No. 16 of 1954), or a law repealed by that Act;“private business corporation” means a private business corporation incorporated under the Private Business Corporations Act [Chapter 24:11];“qualifying degree of export-orientation”, as characterising a licensed investor, means that the licensed investor exports all of its goods and services;[definition inserted by Act 2 of 2017]“recoupment from capital expenditure” means any amount accruing to a person from the sale or other disposal of or damage to or destruction of—

(a)an asset ranking for a redemption allowance in accordance with paragraph 2, 3 or 4 of the Fifth Schedule or the corresponding provisions of a previous law; or

(b)an asset in respect of which a deduction has been allowed to the person in accordance with paragraph 6 of the Fifth Schedule or the corresponding provisions of a previous law;

but in the case of any amount accruing from damage to or destruction of such asset does not include such portion thereof as is in excess of the original cost of such asset;“retirement annuity fund” means a fund registered or provisionally registered as a retirement annuity fund under the Pension and Provident Funds Act [Chapter 24:09];“return” includes a self—assessment return;[definition inserted by Act 12 of 2006]“securities” means—

(a)stocks or securities, including bonds and Treasury bills, issued by any government, local authority or statutory corporation or like authority or body, whether situated inside or outside Zimbabwe; and

(b)debentures or debenture bonds; and

(c)mortgages or notarial bonds; and

(d)loans or deposits; and

(e)shares issued by any building society; and

(f)stocks or shares issued by any company;

and for the purposes of the Eighth Schedule includes any other stocks or shares and rights in immovable property;“self assessment return” means a return rendered in terms of section thirty-seven A;“Special Court” means the Special Court for Income Tax Appeals established by subsection (1) of section sixty-four;“special economic zone” means any part of Zimbabwe declared in terms of the Special Economic Zones Act [Chapter 14:34] (No. 7 of 2016);[definition inserted by Act 2 of 2017]“special mining lease” means a special mining lease issued under Part IX of the Mines and Minerals Act [Chapter 21:05];“special mining lease agreement” means an agreement between the Government and the holder of a special mining lease, entered into in terms of section 167 of the Mines and Minerals Act [Chapter 21:05];“special mining lease area” means the area covered by a special mining lease;“special mining lease operations” means any mining operations, or exploration operations or development operations as defined in paragraph 1 of the Twenty-Second Schedule, carried out in or in relation to a special mining lease area pursuant to the special mining lease;“spouse” does not include—

(a)a husband who is separated from his wife under a judicial order or written agreement of separation; or

(b)a husband who—

(i)is living apart from his wife; and

(ii)is not wholly maintaining his wife; or

(c)a wife who is separated from her husband under a judicial order or written agreement of separation; or

(d)a wife who—

(i)is living apart from her husband; and

(ii)is not wholly maintained by her husband; or

(e)in the case of a polygamous marriage, a wife, other than the first wife, who is living with and wholly maintained by her husband;

“statutory corporation”—

(a)means a body, other than a private society, incorporated by or in terms of a law for special purposes specified in or under the law; and

(b)includes any other body or association specified in subparagraphs (b) to (d) of paragraph 1 of the Third Schedule;

“tax” means any tax or levy leviable under this Act;“tax clearance certificate” means a valid tax clearance certificate issued to a person by or on behalf of the Commissioner-General under section 34C(1)(a), (b) or (c) of the Revenue Authority Act [Chapter 23:11] (Act No. 17 of 1999);[definition inserted by Act 2 of 2005]“taxpayer”—

(a)means any person in respect of whom an assessment is made; and

(b)includes, for the purposes of any provision of this Act relating to a return, any person who is required in terms of this Act to furnish a return;

“trade” includes any profession, trade, business, activity, calling, occupation or venture, including the letting of any property, carried on, engaged in or followed for the purposes of producing income as defined in subsection (1) of section eight and anything done for the purpose of producing such income;“trade mark” means a trade mark as defined in subsection (1) of section 2 of the Trade Marks Act [Chapter 26:04];“trading stock” includes—

(a)goods and other property of any description, including livestock, which are acquired, manufactured, produced, bred, constructed or improved in the ordinary course of trade for the purposes of disposal in the ordinary course of trade; and

(b)goods and other property of any description, including livestock—

(i)which are acquired in the ordinary course of trade for the purposes of or in connection with the manufacture, production, breeding, construction or improvement of goods or other property of any description, including livestock; and

(ii)the expenditure on which is allowable as a deduction in terms of paragraph (a) of subsection (2) of section fifteen;

and

(c)goods and other property of any description referred to in paragraph (b), other than livestock, which, at the end of the year of assessment, are partially manufactured, produced, constructed, improved, consumed or used; and

(d)advertising, packing or other materials, the acquisition, manufacture or production of which is incidental to the disposal in the ordinary course of trade of goods or other property of any description, including livestock; and

(e)goods and other property of any description of a person, including livestock, which—

(i)are acquired by that person otherwise than in the ordinary course of his trade; and

(ii)are brought to hand or otherwise appropriated or allocated by that person for the purposes of or in connection with his trade; and

(iii)would have been “trading stock” as defined in paragraph (a), (b), (c) or (d) had they been acquired in the ordinary course of the trade of that person;

“trust instrument” means a deed, will, contract of settlement or other disposition, including a verbal declaration, by which a trust is created;“trustee” includes—

(a)the administrator or executor of a deceased estate; and

(b)the trustee or assignee of an insolvent estate; and

(c)the liquidator or judicial manager of a company which is being wound up or is under judicial management; and

(d)the legal representative of any individual under a legal disability or other person having, whether in a official or private capacity, the possession, disposal, control or management of the property of an individual under a legal disability; and

(e)the person having the administration or control of property subject to a usufruct, fidei commissum or other limited interest;

and “trust”, “property the subject of a trust” and “income the subject of a trust” shall be construed accordingly;“year of assessment” means the period of twelve months beginning on the 1st January in any year in respect of which tax is to be charged, levied and collected in terms of this Act; and includes any period within such a year of assessment:[definition of substituted by Act 17 of 1997]Provided that—

(i)for the period before the 1st April, 1997, a year of assessment shall be the period of twelve months beginning on the 1st April in any year;

(ii)the nine-month period beginning on the 1st April, 1997, and ending on the 31st December, 1997, shall constitute a year of assessment.

(iii)the year of assessment beginning on the 1st January, 2004, in respect of the taxable income from employment of a person other than a company, a trust or a pension fund, consists of the following two periods, each of which shall be deemed for all purposes of this Act to be a year of assessment—

(A)the eight-month period beginning on the 1st January, 2004, and ending on the 31st August, 2004;

(B)the four-month period beginning on the 1st September, 2004, and ending on the 31st December, 2004;[proviso substituted by Act 2 of 2005]

(iv)the year of assessment beginning on the 1st January, 2005, in respect of the taxable income from employment of a person other than a company, a trust or a pension fund, consists of the following two periods, each of which shall be deemed for all purposes of this Act to be a year of assessment—

(A)the eight-month period beginning on the 1st January, 2005, and ending on the 31st August 2005;

(B)the four-month period beginning on the 1st September, 2005, and ending on the 31st December, 2005[proviso (iv) inserted by Act 2 of 2005]

(v)the year of assessment beginning on the 1st January, 2006, in respect of the taxable income from employment of a person other than a company, a trust or a pension fund, consists of the following two periods—

(A)the eight-month period beginning on the 1st January, 2006, and ending on the 31st August, 2006;

(B)the four-month period beginning on the 1st September, 2006, and ending on the 31st December, 2006.[proviso inserted by Act 6 of 2006]

(vi)the year of assessment beginning on the 1st January, 2007, in respect of the taxable income from employment of a person other than a company, a trust or a pension fund, consists of the following three periods—

(A)the six-month period beginning on the 1st January, 2007, and ending on the 30th June, 2007;

(B)the two-month period beginning on the 1st July, 2007, and ending on the 31st August, 2007.

(C)the four-month period beginning on the 1st September, 2007, and ending on the 31st December, 2007.[proviso (vi) inserted by Act 16 of 2007]

“Zimbabwe Revenue Authority” means the Zimbabwe Revenue Authority established by section 3 of the Revenue Authority Act [Chapter 23:11].

2A. When persons deemed to be associates

(1)Where a person, other than an employee, acts in accordance with the directions, requests, suggestions or wishes of another person, whether or not the persons are in a business relationship and whether or not those directions, requests, suggestions or wishes are communicated to the first-mentioned person, both persons shall be treated as associates of each other for the purposes of this Act.

(2)Without limiting the generality of subsection (1), the following shall be treated as a person’s associate—

(a)a near relative of the person, unless the Commissioner is satisfied that neither person acts in accordance with the directions, requests, suggestions or wishes of the other;

(b)a partner of the person, unless the Commissioner is satisfied that neither person acts in accordance with the directions, requests, suggestions or wishes of the other;

(c)a partnership in which the person is a partner, if the person, either alone or together with one or more associates, controls fifty per centum or more of the rights to the partnership’s income or capital;

(d)the trustee of a trust under which the person, or an associate of the person, benefits or may benefit;

(e)a company which is controlled by the person, either alone or together with one or more associates;

(f)where the person is in a partnership, a partner in the partnership who, either alone or together with one or more associates, controls fifty per centum or more of the rights to the partnership’s income or capital;

(g)where the person is the trustee of a trust, any other person who benefits or may benefit under the trust;

(h)where the person is a company—

(i)a person who, either alone or together with one or more associates, controls the company; or

(ii)another company which is controlled by a person referred to in subparagraph (i), either alone or together with one or more associates.

[section inserted by Act 1 of 2014]

2B. When person deemed to control company

For the purposes of this Act, a person shall be deemed to control a company if the person, either alone or together with one or more associates or nominees—

(a)controls the majority of the voting rights attaching to all classes of shares in the company, whether directly or through one or more interposed companies, partnerships or trusts; or

(b)has any direct or indirect influence that, if exercised, results in him or her or his or her associates or nominees factually controlling the company.

[section inserted by Act 1 of 2014]

Part II – Administration

3. ***

[section repealed by Act 8 of 2011]

4. ***

[section repealed by Act 17 of 1999]

5. Preservation of secrecy

(1)All persons who—

(a)are employed in carrying out the provisions of this Act; or

(b)examine records under the control or in the custody of the Commissioner in terms of the laws relating to the Public Service, the collection and safe custody of public moneys and the audit of public accounts;

shall, subject to subsections (2), (3) and (3a), keep secret, and aid in keeping secret, all information coming to their knowledge in the exercise of their functions.[subsection (1) amended by section 21(a) of Act 12 of 2018]

(2)No person referred to in subsection (1) shall, except in the exercise of his functions under this Act or unless he is required to do so by order of a competent court—

(a)communicate information coming to his knowledge in the exercise of his functions to any person who is not—

(i)the taxpayer or other person to whom the information relates or by whom the information was furnished; or

(ii)the lawful representative of the taxpayer or other person to whom the information relates or by whom the information was furnished; or

(iii)a person to whom the provisions of the laws referred to in paragraphs (a) and (b) of subsection (1) require the information to be communicated;

(b)allow any person who is not a person referred to in subparagraph (i), (ii) or (iii) of paragraph (a) to have access to any record under the control or in the custody of the Commissioner which contains information referred to in that subparagraph.

(3)The Commissioner shall, if he is required to do so by the Minister, inform the Minister of the total amount of taxable income (as defined in subsection (1) of section eight) which, according to the records under the control or in the custody of the Commissioner, accrued during such periods to such classes of persons from such sources as the Minister may specify.

(3a)Where the Commissioner is satisfied that any information is required for the purpose of—

(a)detecting, investigating or preventing a serious offence; or

(b)combating money laundering or terrorist financing;

as defined in the Money Laundering and Proceeds of Crime Act [Chapter 9:24], the Commissioner shall disclose that information to the Director-General of the Financial Intelligence Unit established by that Act.[subsection (3a) inserted by section 21(b) of Act 12 of 2018]

(4)All persons referred to in subsection (1) shall, before commencing to exercise the functions conferred or imposed upon them by the laws referred to in paragraphs (a) and (b) of that subsection, take and subscribe before a magistrate, justice of the peace or commissioner of oaths the prescribed oath of secrecy.

(5)Every person who, in contravention of this section or the true intent of the oath of secrecy taken by him and without lawful excuse, reveals to any person whomsoever any matter or thing which has come to his knowledge in the course of his official duties, or suffers or permits any person to have access to any records in the possession or custody of the Commissioner, shall be guilty of an offence and liable to a fine not exceeding level six or to imprisonment for a period not exceeding one year or to both such fine and such imprisonment.[subsection amended by Act 22 of 2001]

(5a)Any person referred to in subsection (1) who, in the course of his official duties, has acquired information relating to the business or affairs of another person and who uses that information for personal gain, shall be guilty of an offence and liable to a fine not exceeding level ten or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment.[subsection inserted Act 22 of 2001]

(6)Any person who acts in the execution of his office before he has taken the oath prescribed in terms of this section shall be guilty of an offence and liable to a fine not exceeding level four.[subsection substituted by Act 15 of 2002]

Part III – Inccome tax

6. Levy of income tax

There shall be charged, levied and collected throughout Zimbabwe for the benefit of the Consolidated Revenue Fund an income tax in respect of the taxable income, as defined in this Part, received by or accrued to or in favour of any person during the year of assessment ending the 31st March, 1968, and each succeeding year of assessment thereafter.

7. Calculation of income tax

(1)The income tax with which a person is chargeable shall, subject to section fifty, be calculated in accordance with the charging Act by reference to—

(a)the taxable income of the person in the year of assessment; and

(b)the appropriate rates of income tax fixed by the charging Act relating to that year; and

(c)the credits to which the person is entitled in terms of the charging Act relating to that year.

(2)The tax payable in respect of a self-assessment return shall be calculated in accordance with subsection (1) in respect of each year of assessment during which a tax payer carried on a trade and is required to submit a self-assessment return in terms of section thirty-seven A.[subsection inserted by Act 12 of 2006]

8. Interpretation of terms relating to income tax

(1)For the purposes of this Part—“gross income” means the total amount received by or accrued to or in favour of a person or deemed to have been received by or to have accrued to or in favour of a person in any year of assessment from a source within or deemed to be within Zimbabwe excluding any amount (not being an amount included in “gross income” by virtue of any of the following paragraphs of this definition) so received or accrued which is proved by the taxpayer to be of a capital nature and, without derogation from the generality of the foregoing, includes—

(a)any amount so received or accrued by way of annuity other than that part of that amount which, in the opinion of the Commissioner, represents, in the case of an annuity the right to which was acquired by means of the payment of the annuitant or his spouse of a sum of money or the disposal by the annuitant or his spouse of an asset or by both those means, a return of any part of that sum of money or of the value of that asset in respect of which a deduction or a credit in terms of this Act is not allowable or an abatement, deduction or rebate in terms of a previous law was not allowable;Provided that, in the case of an annuity on retirement as defined in paragraph 1 of the First Schedule the right to which was acquired from the disposal of any part of a lump sum payment to which reference is made in paragraph 3, 4, 7 or 8 of that Schedule, the whole of such annuity shall be included;

(b)any amount so received or accrued in respect of services rendered or to be rendered, whether due and payable under any contract of employment or service or not, and any amount so received or accrued by reason of the cessation of the employment or service of a person other than a benefit (not being a pension or gratuity) received or accrued by reason of contributions made to the Consolidated Revenue Fund, and any amount so received or accrued in commutation of amounts due under a contract of employment or service:Provided that—

(i)[proviso (i) repealed by Act 15 of 2002]

(ii)an amount paid to an employee when proceeding on leave shall be deemed to accrue and to be paid proportionately on the last day of each month during the continuance of the period of leave;

(iii)any portion of any amount paid by an employer to an employee by way of compensation for leave due but not taken or by reason of the cessation of the employment or service of such employee or in commutation of an amount due under a contract of employment or service or when proceeding on leave which, under any previous law, fell to be apportioned over a number of years of assessment, shall for the purposes of this Act be included in gross income as though the relevant provisions of such previous law were still in force;

(iv)any amount so received or accrued in the year of assessment ending on the 31st March, 1974, or any subsequent year of assessment which is paid or payable to a member of the Police Force or of the Regular Force of the Army or Air Force by way of a re-engagement or extended service gratuity shall, notwithstanding section seven, be charged to tax in such manner and at such rates as may be fixed by the charging Act relating to the year of assessment in which such amount was received or accrued;

(c)any amount so received by or accrued to a person by reason of his withdrawal from or the winding up of a benefit or pension fund or an unapproved fund (as defined in the First Schedule) or any amount so received by or accrued to a person which is a benefit (not being a pension or gratuity) received or accrued by reason of contributions to the Consolidated Revenue Fund which is not—

(i)an amount referred to in paragraph (a) or (b); or

(ii)an amount received or accrued by way of a lump sum payment to which the First Schedule relates;

(iii)an amount which, in the Commissioner’s opinion, represents a return or repayment of any money in respect of whose payment a deduction was not allowable in terms of this Act or a previous law:

Provided that any amount so received or accrued shall, notwithstanding section seven, be charged to tax in such manner and at such rates as may be fixed by the charging Act relating to the year of assessment in which such amount was received or accrued;

(d)any amount so received or accrued from another person as a premium or like consideration paid by such other person—

(i)for the right of use or occupation of land or buildings; or

(ii)for the right of use of plant or machinery; or

(iii)for the right of use of any patent, design, trade mark, copyright, model, plan, secret process or formula or any other property which, in the opinion of the Commissioner is of a similar nature; or

(iv)for the right of use of any motion picture film or television film, sound recording or advertising matter connected with such film or recording; or

(v)for the imparting of or the undertaking to impart any knowledge directly or indirectly connected with the use of any such plant or machinery, patent design, trade mark, copyright, model, plan, secret process or formula or other property as aforesaid, film, sound recording or advertising matter;

(e)in the case of any person to whom, in terms of any agreement relating to the grant to any other person of the right of use or occupation of land or buildings or by the cession or assignment of any rights under any such agreement, there has accrued in any such year the right to have improvements affected on the land or to the buildings by any other person—

(i)the amount stipulated in the agreement as the value of the improvements or as the amount to be expended on improvements; or

(ii)if no amount is so stipulated, an amount representing, in the opinion of the Commissioner, the fair and reasonable value of the improvements;

and, in either case, any such amount shall be deemed to have accrued to such first-mentioned person from the date such improvements were effected, in equal monthly instalments over the unexpired period of such agreement, cession or assignment, as the case may be, or over a period of ten years, whichever is the less:Provided that—

(i)all instalments which have not in any year of assessment formed part of the gross income of such first-mentioned person in terms of this paragraph immediately before the date of the happening of the first of any of the following events, shall be deemed to have accrued to him immediately before that date—

(A)the cancellation of such agreement, cession or assignment; or

(B)the sale or other disposal of the land or buildings on which the improvements were effected; or

(C)the death or insolvency of such first—mentioned person or, if such first mentioned person is a company, the liquidation of the company;

(ii)in any case where such agreement is for an initial period which may be extended or renewed for a further period or periods, the period of such agreement shall be deemed to be the initial period only;

(iii)in any case where such agreement is silent or indefinite as to the period of use or occupation, the period of such agreement shall be deemed to be a period of ten years;

(iv)any portion of any instalments which, under any previous law, fell to be apportioned over a number of years of assessment shall, for the purposes of this Act, be included in gross income as though the relevant provisions of such previous law were still in force;

(f)an amount equal to the value of an advantage or benefit in respect of employment, service, office or other gainful occupation or in connection with the taking up or termination of employment, service, office or other gainful occupation:Provided that—

(i)an amount equal to the value of the grant of a passage benefit as defined in subparagraph (i) of paragraph (a) of the definition of that term in this paragraph shall not be included in the gross income of an employee if no other passage benefit as defined in that subparagraph has been granted to the employee by the same employer;

(ii)an amount equal to the value of the grant of a passage benefit as defined in subparagraph (ii) of paragraph (a) of the definition of that term in this paragraph shall not be included in the gross income of an employee if no other passage benefit as defined in that subparagraph has been granted to the employee by the same employer.

For the purposes of this paragraph—

(I)“advantage or benefit”—

(a)means—

(i)board; or

(ii)the occupation of quarters or of a residence; or

(iii)the use of furniture or of a motor vehicle; or

(iv)the use or enjoyment of any other property whatsoever, corporeal or incorporeal, including a loan, whether of the same kind as that referred to in subparagraph (i), (ii) or (iii) or not, which is not an amount referred to in paragraph (a), (b) or (c) of the definition of “gross income” in this subsection; or

(v)an allowance;

(vi)in the case of an employee who is a member of the teaching or non-teaching staff of a “school” as defined in the Education Act [Chapter 25:04], the waiver of the whole or any portion of the amount of tuition fees, levies and boarding fees (hereinafter called a “school benefit”) that would otherwise be payable by the employee for any child of his or hers who is a student at that or another school;[subparagraph inserted by Act 6 of 2012]

granted to a employee, his spouse or child by or on behalf of his employer in so far as it is not consumed, occupied, used or enjoyed, as the case may be, for the purpose of the business transactions of the employer and in so far as a amount is not paid by the employee, his spouse or child in respect of its grant; and

(b)includes a passage benefit; and

(c)includes any other advantage or benefit whatsoever in lieu of or in the nature of “remuneration” as defined in paragraph 1(1) of the Thirteenth Schedule;[paragraph (c) inserted by Act 8 of 2011]

“employee” includes a person who is a director of a company, agent or servant or is otherwise gainfully occupied and “employer”, in relation to such person shall be construed accordingly;“loan” means any form of loan or credit whatsoever granted directly or indirectly to an employee, his spouse or child by or on behalf of his employer or a person associated with his employer, but does not include any such loan or credit which is proved to the satisfaction of the Commissioner to have been granted for the purpose of the education or technical training or medical treatment of such employee, spouse or child;“passage benefit” means so much as is borne of the cost or paid by an employer towards the cost of—

(a)any journey made by an employee, his spouse and children or one or more of them—

(i)in connection with his taking up of employment, service, office or other gainful occupation; or

(ii)on the termination of his employment, service, office or other gainful occupation; or

(b)any other journey made by an employee, his spouse and children or one or more of them in so far as that journey is not made for the purpose of a business transaction of the employer;

“person associated”, in relation to an employer, means—

(a)in the case of an employer that is a company, any other company that is managed by or under the same control as the employer; or

(b)in the case of an employer that is not a company—

(i)any company managed by or under the control of such employer; or

(ii)any partnership of which such employer is a member; or

(c)any person to whom or fund to which the employer makes or has made any contribution, loan or other payment in order that such person or fund may pay or grant pensions, loans or any other amounts whatsoever to or in respect of his employees or their spouses or children;

(II)the value of the grant of an advantage or benefit, other than a payment by way of an allowance, shall be determined—

(a)in the case of the occupation or use of quarters, residence or furniture, by reference to its value to the employee; and

(b)in the case of any other advantage or benefit, by reference to the cost to the employer: Provided that—

(i)in the case of a loan on which the rate of interest payable by the grantee—

(a)during the period beginning on the 1st October, 1984, and ending on the 31st March, 1985, is less than nine and three-quarters per centum per annum; or

(b)during the year of assessment beginning on the 1st April, 1985, is less than eleven and one-half per centum per annum; or

(c)during the years of assessment beginning on the 1st April, 1986, and ending on the 31st March, 1991 is less than—

(A)twelve and one-half per centum per annum, where the amount of the loan does not exceed twelve thousand dollars; or

(B)thirteen and one-quarter per centum per annum, where the amount of the loan exceeds twelve thousand dollars;

(d)during the year of assessment beginning on the 1st April, 1991, is less than—

(A)thirteen per centum per annum, where the amount of the loan does not exceed twelve thousand dollars;

(B)fourteen and one-half per centum per annum, where the amount of the loan exceeds twelve thousand dollars;

(e)during the year of assessment beginning on 1st April, 1992, is less than—

(A)ten per centum per annum, where the amount of the loan does not exceed thirty-five thousand dollars;

(B)twelve per centum per annum, where the amount of the loan exceeds thirty-five thousand dollars;

(f)in respect of the years of assessment beginning on the 1st April, 1993 and ending on the 31st December 2000, is less than—

(A)ten and one-half per centum, where the amount of the loan does not exceed thirty-five thousand dollars;

(B)fourteen per centum, where the amount of the loan exceeds thirty-five thousand dollars;

the cost to the employer in respect of that period or year of assessment shall be deemed to be equal to an amount determined by applying the following formula—A–Bin which—

(A)represents the amount of interest that would have been payable on the loan during such period or year of assessment by the person to whom the loan had been granted, had interest been payable by him at the appropriate rate specified in paragraph (a), (b), (c), (d), (e), (f) or (g);[paragraph amended by Act 18 of 2000]

(B)represents the amount of interest payable on the loan during such period or year of assessment by the person to whom the loan has been granted;

(g)during the year of assessment beginning on the 1st January, 2001, and any subsequent year of assessment, is less than—

(A)twelve and one-half per centum where the amount of the loan does not exceed thirty-five thousand dollars;

(B)sixteen per centum where the amount of the loan exceeds thirty-five thousand dollars.[paragraph inserted by Act 18 of 2000]

(h)during the year of assessment beginning on the 1st January, 2009, and any subsequent year of assessment, is less than the LIBOR rate plus five per centum where the amount of the loan exceeds one hundred United States dollars.

[proviso inserted by Act 5 of 2009. Act purported to substitute proviso (h) for (g) in error]

(ii)in the case of a motor vehicle, the cost to the employer shall be deemed to be the following in respect of any period before the 31st December, 1998, unless the person entitled to use the motor vehicle proves the contrary or unless the Commissioner considers such cost to be greater—[proviso amended Act 29 of 1998]

(a)in respect of the years of assessment beginning on the 1st April, 1984, and ending on the 31st March, 1991—

(i)one thousand five hundred dollars, in the case of a motor vehicle whose engine capacity does not exceed one thousand five hundred cubic centimetres;

(ii)two thousand dollars, in the case of a motor vehicle whose engine capacity exceeds one thousand five hundred cubic centimetres but does not exceed two thousand cubic centimetres;

(iii)three thousand dollars, in the case of a motor vehicle whose engine capacity exceeds two thousand cubic centimetres;

(b)in respect of the years of assessment beginning on the 1st April, 1991, and ending on the 31st March, 1997—

(i)two thousand four hundred dollars, in the case of a motor vehicle whose capacity does not exceed one thousand five hundred cubic centimetres;

(ii)three thousand two hundred dollars, in the case of a motor vehicle whose engine capacity exceeds one thousand five hundred cubic centimetres but does not exceed two thousand cubic centimetres;

(iii)four thousand eight hundred dollars in the case of a motor vehicle whose engine capacity exceeds two thousand cubic centimetres;

and such deemed cost shall be reduced proportionately where the period of use of the motor vehicle is less than the year of assessment;

(c)in respect of the period beginning on the 1st April, 1997, and ending on the 31st December, 1997, fifty per centum of the cost to the employer;

(d)in respect of the period beginning on the 1st January, 1998, and ending on the 31st December, 1998, seventy-five per centum of the cost to the employer;

(e)...

(iii)in the case of a motor vehicle, in respect of the year of assessment beginning on the 1st January, 1999, and any subsequent year of assessment, the cost to the employer shall be deemed to be the following—

(a)twenty-five thousand dollars, in the case of a motor vehicle whose engine capacity does not exceed one thousand five hundred cubic centimetres;

(b)forty thousand dollars, in the case of a motor vehicle whose capacity exceeds one thousand five hundred cubic centimetres but does not exceed two thousand cubic centimetres;

(c)seventy thousand dollars, in the case of a motor vehicle whose capacity exceeds two thousand cubic centimetres but does not exceed three thousand cubic centimetres;

(d)one hundred thousand dollars, in the case of a motor vehicle whose capacity exceeds three thousand cubic centimetres;

and such deemed cost shall be reduced proportionally where the period of use of the motor vehicle is less than the year of assessment;[proviso (iii) inserted by Act 29 of 1998]

(iv)in the case of a motor vehicle, in respect of the year of assessment beginning on the 1st January, 2000, and ending on the 31st December, 2001 and any subsequent year of assessment, the cost to the employer shall be deemed to be the following—

(a)forty thousand dollars, in the case of a motor vehicle whose engine capacity does not exceed one thousand five hundred cubic centimetres;

(b)sixty thousand dollars, in the case of a motor vehicle whose capacity exceeds one thousand five hundred cubic centimetres but does not exceed two thousand cubic centimetres;

(c)one hundred thousand dollars, in the case of a motor vehicle whose capacity exceeds two thousand cubic centimetres but does not exceed three thousand cubic centimetres;

(d)one hundred and fifty thousand dollars, in the case of a motor vehicle whose engine capacity exceeds three thousand cubic centimetres;

and such deemed cost shall be reduced proportionally where the period of use of the motor vehicle is less than the year of assessment.[proviso (iv) inserted by Act 18 of 2000]

(v)in the case of a motor vehicle, in respect of the year of assessment beginning on the 1st January, 2002, and ending on the 31st December, 2002 and any subsequent year of assessment, the cost to the employer shall be deemed to be the following—[proviso (v) amended by Act 15 of 2002]

(a)fifty thousand dollars, in the case of a motor vehicle whose engine capacity does not exceed one thousand five hundred cubic centimetres;

(b)one hundred and fifty thousand dollars, in the case of a motor vehicle whose capacity exceeds one thousand five hundred cubic centimetres but does not exceed two thousand cubic centimetres;

(c)two hundred and fifty thousand dollars, in the case of a motor vehicle whose capacity exceeds two thousand cubic centimetres but does not exceed three thousand cubic centimetres;

(d)four hundred thousand dollars, in the case of a motor vehicle whose capacity exceeds three thousand cubic centimetres;

and such deemed cost shall be reduced proportionally where the period of use of the motor vehicle is less than the year of assessment.

(vi)in the case of a motor vehicle, in respect of the year of assessment beginning on the 1st January, 2004, and any subsequent year, the cost to the employer shall be deemed to be the following—

(a)two hundred and forty thousand dollars, in the case of a motor vehicle whose engine capacity does not exceed one thousand five hundred cubic centimetres;

(b)four hundred and twenty thousand dollars, in the case of a motor vehicle whose capacity exceeds one thousand five hundred cubic centimetres but does not exceed two thousand cubic centimetres;

(c)five hundred and forty thousand dollars, in the case of a motor vehicle whose capacity exceeds two thousand cubic centimetres but does not exceed three thousand cubic centimetres;

(d)nine hundred thousand dollars, in the case of a motor vehicle whose capacity exceeds three thousand cubic centimetres;

and such deemed cost shall be reduced proportionally where the period of use of the motor vehicle is less than the year of assessment.[proviso inserted by Act 15 of 2002 and amended by Act 10 of 2003]

(vii)in the case of a motor vehicle, in respect of the year of assessment beginning on the 1st January, 2004, and any subsequent year of assessment, the cost to the employer shall be deemed to be the following—

(a)six hundred thousand dollars, in the case of a motor vehicle whose engine capacity does not exceed one thousand five hundred cubic centimetres;

(b)one million two hundred and sixty thousand dollars, in the case of a motor vehicle whose capacity exceeds one thousand five hundred cubic centimetres but does not exceed two thousand cubic centimetres;

(c)two million four hundred and eighty thousand dollars, in the case of a motor vehicle whose capacity exceeds two thousand cubic centimetres but does not exceed three thousand cubic centimetres;

(d)three million three hundred and twelve thousand dollars, in the case of a motor vehicle whose capacity exceeds three thousand cubic centimetres;

and such deemed cost shall be reduced proportionally where the period of use of the motor vehicle is less than the year of assessment;[proviso inserted by Act 10 of 2003]

(viii)in the case of a motor vehicle, in respect of the year of assessment beginning on the 1st January, 2005, and any subsequent year of assessment, the cost to the employer shall be deemed to be the following—

(a)two million two hundred and eighty thousand dollars, in the case of a motor vehicle whose engine capacity does not exceed one thousand five hundred cubic centimetres;

(b)four million two hundred thousand dollars, in the case of a motor vehicle whose capacity exceeds one thousand five hundred cubic centimetres but does not exceed two thousand cubic centimetres;

(c)six million four hundred and eighty thousand dollars, in the case of a motor vehicle whose capacity exceeds two thousand cubic centimetres but does not exceed three thousand cubic centimetres;

(d)seven million two hundred thousand dollars, in the case of a motor vehicle whose capacity exceeds three thousand cubic centimetres;

and such deemed cost shall be reduced proportionally where the period of use of the motor vehicle is less than the year of assessment;[proviso (viii) inserted by Act 10 of 2003 and amended by section 6 of Act 8 of 2005]

(ix)in the case of a motor vehicle, in respect of the year of assessment beginning on the 1st January, 2007, and any subsequent year of assessment, the cost to the employer shall be deemed to be the following—

(a)nine million dollars, in the case of a motor vehicle whose engine capacity does not exceed one thousand five hundred cubic centimetres;

(b)fifteen million dollars, in the case of a motor vehicle whose capacity exceeds one thousand five hundred cubic centimetres but does not exceed two thousand cubic centimetres;

(c)eighteen million dollars, in the case of a motor vehicle whose capacity exceeds two thousand cubic centimetres but does not exceed three thousand cubic centimetres;

(d)twenty-four million dollars, in the case of a motor vehicle whose capacity exceeds three thousand cubic centimetres;

and such deemed cost shall be reduced proportionally where the period of use of the motor vehicle is less than the year of assessment;[proviso (ix) inserted by section 6 of Act 8 of 2005 and amended by Act 12 of 2006. The Law Reviser confirms that Act 12 of 2006 erroneously substituted 1st January, 2007 for 1st January, 2006. The year 2007 is provided for in proviso (xi)]

(x)in the case of a sale or disposal of a motor vehicle to an employee, whether during or on termination of the employee’s employment, in respect of the year of assessment beginning on the 1st January, 2009, and any subsequent year of assessment, the deemed benefit shall be determined in accordance with the following formula:A—Bwhere—A represents the market value of the motor vehicle:B represents the cost at which the employee acquired the motor vehicle:[proviso amended by Act 10 of 2009]Provided that if the motor vehicle was acquired before the 1st January, 2009, the cost of the vehicle shall be the value of the vehicle shown in the final balances of the employer determined and carried forward in terms of section 3(3) and (4) of the Finance Act, 2009 (as substituted by the Finance Ac (No. 2) Act, 2009).No advantage or benefit in terms of this proviso shall be deemed to have accrued to an employee who, on the date of the sale or disposal is of or over the age of fifty-five.In determining the market value of a motor vehicle for the purposes of this proviso, the Commissioner shall have regard to the valuation of a member of such institution or association of motor dealers or valuers as is prescribed by the Commissioner by notice in the Gazette.[proviso (x) substituted by Act 5 of 2009]

(xi)in the case of a motor vehicle, in respect of the year of assessment beginning on the 1st January, 2014, and any subsequent year of assessment, the cost to the employer shall be deemed to be the following—

(a)three thousand six hundred United States dollars, in the case of a motor vehicle whose engine capacity does not exceed one thousand five hundred cubic centimetres;

(b)four thousand eight hundred United States dollars, in the case of a motor vehicle whose capacity exceeds one thousand five hundred cubic centimetres but does not exceed two thousand cubic centimetres;

(c)seven thousand two hundred United States dollars, in the case of a motor vehicle whose capacity exceeds two thousand cubic centimetres but does not exceed three thousand cubic centimetres;

(d)nine thousand six hundred United States dollars, in the case of a motor vehicle whose capacity exceeds three thousand cubic centimetres;

and such deemed cost shall be reduced proportionally where the period of use of the motor vehicle is less than the year of assessment;[proviso (xi) substituted by Act 1 of 2014]

(xii)[proviso repealed by Act 10 of 2009]

(xiii)[proviso repealed by Act 10 of 2009]

(xiv)[proviso repealed by Act 10 of 2009]

(g)subject to paragraph 3 of the Seventh Schedule, where land is sold or otherwise disposed of and timber or other crops are growing on such land which, in the opinion of the Commissioner, have been grown for sale, the market value of such timber or growing crops at the time such land is sold or so disposed of:Provided that no amount will be included in gross income if such timber or crops were acquired by such person by way of inheritance or donation and did not become assets of any trade carried on by him;

(h)an amount equal to the value, determined in accordance with the provisions of the Second Schedule, of the trading stock belonging to a person carrying on a trade which—

(i)has not been disposed of at the end of the year of assessment; or

(ii)has, during the year of assessment, been taken by the person for his domestic or private consumption or use; or

(iii)has, during the year of assessment—

(A)vested in the trustee of the person on the insolvency, winding up or death of the person; or

(B)been given by the person to some other person; or

(C)been disposed of by the person otherwise than—

(I)in a manner described in this paragraph; or

(II)by sale or exchange;

(iv)is, at the end of the year of assessment, attached in pursuance of an order of court; or

(v)has, during the year of assessment, been—

(A)disposed of by the person in pursuance of the sale or other disposal of his business; or

(B)sold in pursuance of an order of court;

(i)any recoupments from capital expenditure which—

(i)exceed the balance of capital expenditure ranking for redemption in terms of paragraphs 2, 3, 4 and 5 of the Fifth Schedule or the corresponding provisions of any previous law; or

(ii)are a recovery of amounts allowed as a deduction in terms of paragraph 6 of the Fifth Schedule or the corresponding provisions of any previous law;

(j)any amount allowed to be deducted under subsection (2) of section fifteen or the corresponding provisions of any previous law other than any sums deducted in terms of paragraph 5 of the Fourth Schedule, the Sixth Schedule, paragraph 2 of the Seventh Schedule and paragraph 3 of the Fourteenth Schedule or the corresponding provisions of any previous law, whether in the current or any previous year of assessment, which has been recovered or recouped:Provided that—

(i)if an amount which has been allowed as a deduction under paragraph 2 or 3 of the Fourth Schedule, or under the corresponding provisions of any previous law, has been recovered or recouped by a person as a result of damage or destruction of any asset in respect of which a deduction—

(a)has been allowed; or

(b)would have been allowed had it been new or unused at the time of acquisition; or

(c)would have been allowed had the expenditure been incurred on or after the 1st April, 1967; or

(d)would have been allowed, if it had been new or unused at the time of acquisition and the expenditure had been incurred on or after the 1st April, 1967;

in terms of paragraph 5 of that Schedule as it existed on the 31st March, 1981, or, with effect from the year of assessment beginning on the 1st April, 1981, would have been so allowed had that paragraph not been repealed with effect from that year, such amount shall not be included in the gross income of that person if he satisfies the Commissioner—

(A)that he has purchased or constructed or will purchase or construct, within a period of eighteen months from the date the asset was damaged or destroyed, a further asset of a like nature in replacement thereof; and

(B)that such further asset has been or will be brought into use within a period of three years from the date the aforesaid asset was damaged or destroyed;

so, however, that if in the event the Commissioner is not satisfied—

(I)that the whole of the amount so recovered or recouped has been fully expended on the purchase or construction of a further asset of a like nature within the period stipulated in subparagraph A, he shall include any amount not so expended in that person’s gross income in the year of assessment in which the amount was originally recovered or recouped; or

(II)that the further asset of a like nature has been brought into use within the period stipulated in subparagraph B, he shall include in that person’s gross income, in the year of assessment in which the amount was originally recovered or recouped, any part of that amount not previously included in gross income;

(ii)any amount recovered or recouped by an employer on the winding up of a benefit or pension fund or on his ceasing to be an employer because of insolvency or liquidation or on the withdrawal of all his employees from membership of the fund shall not be excluded from gross income;

(k)the amount or value of any benefit received by or accrued to a taxpayer as a result of any concession granted by, or compromise or arrangement made with, a creditor whereby a liability which arose from expenditure in respect of which a deduction has been made under subsection (2) of section fifteen or the corresponding provisions of any previous law, is reduced or extinguished:Provided that—

(i)any benefit relating to expenditure in respect of assets ranking for the allowances referred to in paragraphs (c), (f) and (z) of subsection (2) of section fifteen shall not exceed the total amount of the allowances so granted less any allowance granted under paragraph 5 of the Fourth Schedule prior to its repeal;

(ii)the provisions of this paragraph shall not apply in respect of any reduction in liability in consequence of—

(A)a taxpayer having been adjudged or otherwise declared, or having become, insolvent or having made an assignment of his property or estate for the benefit of his creditors; or

(B)the estate of the taxpayer having been vested in the Corporation as defined in section 2 of the Agricultural Finance Act [Chapter 18:02][paragraph (B) substituted by Act 14 of 1999]

(C)the taxpayer, in the case of a company, having been wound up by the court on the grounds that it is unable to pay its debts;

(l)in the case of a person by whom any movable or immovable property has been acquired, any amount paid, whether in the form of rent, premium, consideration in the nature of a premium or otherwise, for the right of use or occupation of such property which has been allowed as a deduction under this Act or a previous law in the determination of any person’s taxable income and which, or the equivalent of which, is upon the subsequent acquisition of such property applied in reduction or towards settlement of the purchase price of such property.For the purposes of this paragraph—

(i)any expenditure incurred by a person in pursuance of an obligation to effect improvements to land or buildings under an agreement by which the right of use or occupation of the land or buildings is granted by another, shall be deemed to be an amount which has been paid;

(ii)where any amount has been paid by any person for the right of use or occupation of any property, which is thereafter acquired by that or any other person for no consideration or for a consideration which, in the opinion of the Commissioner, is not an adequate consideration, such amount, unless the Commissioner, having regard to the circumstances of the case, otherwise decides, or so much thereof as does not exceed the fair market price, as determined by the Commissioner, of such property where no consideration was given, or the difference between such fair market price and the amount of the consideration for which it has been acquired as aforesaid, as the case may be, shall be deemed to have been applied in reduction or towards settlement of the purchase of such property:Provided that—

(i)any amount included in the gross income of any person under this paragraph may, if that person so elects (which election shall be binding) be deemed to accrue in six successive equal instalments, the first instalment to be deemed to have accrued in the year of assessment in which he acquired the property and the subsequent instalments being deemed to accrue in each year of assessment thereafter, so, however, that, if a person who has made an election in terms of this paragraph subsequently disposes of the property in question before the expiry of the period of six years, the balance of the instalments which have not already been included in his income shall be included in his income for the year of assessment in which the property is so disposed of;

(ii)any portion of any amount which was included in the gross income of any person under similar provisions of a previous law and which under such previous law fell to be apportioned over a number of years of assessment shall, for the purposes of this Act, be included in gross income as though the relevant provisions of such previous law were still in force;

(m)any amount received or accrued by way of grant or subsidy in respect of any expenditure allowed or allowable as a deduction under this Act or a previous law;

(n)any amount received or accrued by way of commutation of a pension or annuity, the right to which was acquired by virtue of contributions first made on or after the 1st August, 1970, and which is payable by a retirement annuity fund, to the extent that it exceeds the amount that would have been payable had one-third only of the total value of the pension or annuity been commuted;[subparagraph amended by Act 17 of 1997]

(o)any amount received or accrued, directly or indirectly, from the State in terms of the Designated Areas Grant Scheme;

(p)any amount so received accrued to a petroleum operator which, in terms of the Twentieth Schedule, is income attributable to petroleum operations carried on by the petroleum operator;

(r)any amount so received or accrued by way of commutation of a pension or annuity which is payable from the Consolidated Revenue Fund or a pension fund, other than a retirement annuity fund, if the pension or annuity itself would not have been subject to income tax;[paragraph substituted by Act 29 of 2004][Please note: numbering as in original.]

(s)any amount so received or accrued to the holder of a special mining lease, where the amount, in terms of the twenty-Second Schedule, is income attributable to special mining lease operations carried out by him;

(t)the amount so received or accrued as a result of the sale of shares offered to an employee pursuant to a share option scheme as adjusted in accordance with the following formula:A—(B + C)where—A represents the value of the shares at the time of exercise of the share option by the employee;B represents the value of the shares offered to the employee pursuant to a share option scheme,C represents the figure B to which the inflation allowance is applied, which allowance is to be determined in accordance with the following formula:(D — E) x B/ Ewhere—D is the figure for the All-items Consumer Price Index issued by the Central Statistics Office at the time the employee exercises the share option;E is the figure for the All-items Consumer Price Index issued by the Central Statistics Office at the time when the shares were offered to the employees pursuant to a share option scheme.[paragraph inserted by section 8 of Act 16 of 2007]

“income” means the amount remaining of the gross income of any person for any such year after deducting therefrom any amounts exempt from income tax under this Act;“taxable income” means the amount remaining after deducting from the income of any person all the amounts allowed to be deducted from income under this Act.

(2)For the purposes of the definition of “gross income” in subsection (1), when, owing to a variation in the rate of exchange of currency between Zimbabwe and any other country, the amount received, expressed in Zimbabwean currency, differs from the amount that had accrued prior to the variation in the rate of exchange—

(a)the amount to be included in gross income shall be the said amount received, expressed in Zimbabwean currency; and

(b)if the receipt and the accrual occur in different years of assessment, effect shall be given to the increase or reduction in the gross income in the year of assessment in which the amount was received.

(3)For the purposes of the definition of “gross income” in subsection (1), any amount received that constitutes prepayment for goods, services or benefits that will be used up in any subsequent year of assessment shall not form part of the gross income for the year of assessment for which a return of income is made but must be included in the year of assessment in which the goods, services or benefits are used up or, if used up in stages or batches, included proportionately in the returns for the years of assessment in which the goods, services or benefits are so used up.[subsection inserted by Act 1 of 2018]

9. ***

[section repealed by Act 10 of 2009]

10. Special circumstances in which income is deemed to have accrued

(1)Income shall be deemed to have accrued to a person notwithstanding that such income—

(a)has been invested, accumulated or otherwise capitalized by him; or

(b)has not been actually paid over to him but remains due and payable to him; or

(c)has been credited to an account or re-invested or accumulated or capitalized or otherwise dealt with in his name or on his behalf;

and a complete statement of all such income shall be included by any person in the returns rendered by him under this Act.

(2)Income received by or accrued to or in favour of a partnership in any period ending on an accounting date shall be deemed to be income received by or accrued to or in favour of the partners on such accounting date in the proportions in which the partners agree to share the profits of the partnership as at such date.

(3)If, in pursuance or by reason of a donation, settlement or other disposition, income accrues to or in favour of or is paid to or applied to the benefit of or is accumulated for the future benefit of a minor child, whether legitimate or illegitimate, of the person by whom the donation, settlement or other disposition was made, the income so accruing, paid, applied or accumulated shall be deemed to be income received by or accrued to or in favour of the person by whom the donation, settlement or other disposition was made.

(4)If—

(a)in pursuance or by reason of a donation, settlement or other disposition made by a person, income accrues to or in favour of or is paid to or applied to the benefit of or is accumulated for the future benefit of a minor child, whether legitimate or illegitimate, of some other person; and

(b)the parent of the child or his spouse or a near relative of the parent of the child or of the spouse of the parent of the child has made a donation, settlement or other disposition or given some consideration to or in favour of the person or the spouse or a near relative of the person or of the spouse of the person by whom the donation, settlement or other disposition referred to in paragraph (a) was made;

the income so accruing, paid, applied or accumulated shall be deemed to be income received by or accrued to or in favour of the parent of the child.

(5)If in any deed of donation, settlement or other disposition a person has stipulated that the beneficiaries, or some of them, shall not receive the income thereunder or some portion of that income until the happening of some event, whether fixed or contingent and—

(a)if by virtue of the powers conferred under such deed upon that person, his spouse, his near relative or a near relative of his spouse he or she has power to control the ultimate evolution of that income or portion thereof or of any funds derived from the accumulation of such income; or

(b)if that income or portion thereof or those funds or any property under such deed may—

(i)devolve upon that person, his spouse, his deceased estate, the deceased estate of his spouse or the deceased estate of the first dying spouse and the surviving spouse; or

(ii)be lent to that person or any of the persons referred to in paragraph (a) or to a company controlled by that person and those other persons or one or more of them;

the income or portion thereof, as the case may be, to the extent to which it is to be withheld from the beneficiaries, shall, until the happening of the event stipulated in the deed, be deemed to be income of that person.

(6)If any deed of donation, settlement or other disposition contains any stipulation that the right to receive any income thereby conferred may, under powers retained by the person by whom that right is conferred, be revoked or conferred upon another, so much of any income as in consequence of the donation, settlement or other disposition, is received by or accrues to or in favour of or is deemed to be received by or to accrue to or in favour of the person on whom that right is conferred, shall be deemed to be the income only of the person by whom it is conferred, so long as he retains those powers.

(7)Subject to subsection (2) of section eight and sections seventeen and eighteen, where during any year of assessment a taxpayer becomes entitled to any amount which is payable after the last day of that year of assessment, the amount shall be deemed to have accrued to him during that year of assessment:Provided that, if in respect of any year of assessment before the 1st April, 1991, the taxpayer submitted a return of income prepared on the basis that the value of the amount accruing to him during that year of assessment was less than the amount that he would ultimately receive, there shall be deemed to have accrued to him, in any subsequent year of assessment in which he received the amount or any portion thereof, a sum equal to the difference between the value of the amount or portion thereof which he so declared and the amount or portion thereof which he received.

11. Special provisions in connection with income derived from assets in deceased and insolvent estates

(1)In this section—“ascertained beneficiary”, in relation to income received or accruing by virtue of an asset in a deceased estate or the proceeds or any part of the proceeds of an asset in a deceased estate, means a person named or identified in the will of the deceased person who by reason of the will, acquires on the death of the deceased person an immediate certain right to claim the present or future enjoyment of the income so received or accruing;“asset in a deceased estate” does not include a right to claim an amount which became due and payable before the death of the deceased person.

(2)So much of the income received or accruing by virtue of an asset in a deceased estate or the proceeds or any part of the proceeds of an asset in a deceased estate during the period beginning immediately after the death of the deceased person and ending immediately before a person, other than a person who acquires the asset in pursuance of the realization of the assets in the deceased estate of the asset or the proceeds or part of the proceeds of the asset, as the case may be, as is received by or accrues to or in favour of an ascertained beneficiary, shall be treated for the purposes of this Act as income of the ascertained beneficiary and not as income received in or accruing to the deceased estate.

(3)Income received or accruing by virtue of an asset in a deceased estate or an asset in an insolvent estate or the proceeds or any part of the proceeds of an asset in the deceased or insolvent estate during the period beginning immediately after a person becomes entitled to the transfer from the deceased or insolvent estate of the asset or the proceeds or part of the proceeds of the asset, as the case may be, and ending immediately before the transfer from the deceased or insolvent estate of the asset or the proceeds or part of the proceeds of the asset, as the case may be, shall, unless the effect of a condition governing the transfer is to provide that the income so received or accruing shall continue to be income of the deceased or insolvent estate, be treated for the purposes of this Act—

(a)in the case of income which is not income the subject of a trust to which no beneficiary is entitled, as income of the person who has immediately after the transfer an immediate certain right to the present or future enjoyment of the income so received or accruing; and

(b)in the case of income the subject of a trust to which no beneficiary is entitled, as income of the trust;

and not as income received in or accruing to the deceased or insolvent estate.

(4)For the avoidance of doubt it is declared that—

(a)an amount received or accruing by virtue of a right forming part of the assets in a deceased estate which did not become due and payable before the death of the deceased person shall, subject to paragraph (b), be income for the purposes of this Act if the amount would have been income of the deceased person had it been received or been deemed to have been received by him or accrued or been deemed to have accrued to him or in his favour in his lifetime; and

(b)an amount received in a deceased estate which would have been income of a deceased person had it been received or been deemed to have been received by him or accrued or been deemed to have accrued to him or in his favour in his lifetime shall not be income for the purposes of this Act if—

(i)the decease person had no right to claim the amount in his lifetime; and

(ii)the amount is received ex gratia or in pursuance of a gratuitous promise made after the death of the deceased person;

and

(c)an amount received or forming part of the assets in a deceased estate—

(i)which became due and payable before the death of the deceased person; and

(ii)which the deceased person had a right to claim in his lifetime;

shall be income received by or accruing to or in favour of the deceased person on the date the amount became due and payable if the amount would have been income of the deceased person had it been received by him in his lifetime.

12. Circumstances in which amounts are deemed to have accrued from sources within Zimbabwe

(1)An amount shall be deemed to have accrued to any person from a source within Zimbabwe whenever it has been received by or has accrued to or in favour of such person—

(a)under any contract made within Zimbabwe for the sale of goods, whether such goods have been delivered or are to be delivered in or out of Zimbabwe;

(b)for any service rendered or work or labour done by such person in the carrying on in Zimbabwe of any trade, whether the payment for such service or work or labour is made or is to be made by a person resident in or out of Zimbabwe, and wherever payment for such service or work or labour is made or is to be made;

(c)for any service rendered or work or labour done as an employee by such person outside Zimbabwe, during any temporary absence of such person from Zimbabwe, if such person is ordinarily resident in Zimbabwe, whether the payment for such service or work or labour is or is to be made by a person resident in or out of Zimbabwe and wheresoever payment for such service or work or labour is or is to be made.For the purposes of this paragraph—

(i)“temporary absence” means an absence for a period or periods not exceeding in the aggregate one hundred and eighty-three days during the year of assessment;

(ii)“employee” includes a director of a company;

(d)for services rendered to the State either inside or outside Zimbabwe:Provided that an amount received by or accrued to or in favour of a person by virtue of services rendered outside Zimbabwe shall not be deemed to have accrued from a source within Zimbabwe if the person was not ordinarily resident outside Zimbabwe solely for the purpose of rendering such service;

(e)by virtue of a pension or annuity for services rendered which is or was granted to the person by—

(i)any person wherever resident; or

(ii)the Government of the former Federation; or

(iii)the State;

wherever the funds from which the pension or annuity is paid are situate or payment of the pension or annuity is made:Provided that—

(i)a pension or annuity shall not be deemed to be derived from a source within Zimbabwe if the service or employment for which it was granted was performed wholly outside Zimbabwe and the remuneration for the service or employment was not deemed by virtue of paragraph (d) to accrue from a source within Zimbabwe;

(ii)a pension or part of a pension granted by the Government of the former Federation shall not be deemed to be derived from a source within Zimbabwe if—

(A)the pension was granted in pursuance of the dissolution of the former Federation and the recipient of the pension was—

(I)ordinarily resident in Malawi or Zambia on the 31st March, 1964; or

(II)not ordinarily resident in Malawi or Zambia on the 31st March, 1964, in any of the Territories which comprised the former Federation and his home Territory, as determined in Part I of Schedule II to the Federation of Rhodesia and Nyasaland (Dissolution) Order in Council 1963 of the United Kingdom or the regulations in terms of which such pension is payable, as the case may be, was not Zimbabwe, and, if he had no home Territory, he was not ordinarily resident in Zimbabwe at the time he first became entitled to such pension;

(B)the pension was granted otherwise than in pursuance of the dissolution of the former Federation and the recipient of the pension was not employed by—

(I)the Government of Southern Rhodesia immediately before he joined the service of the Government of the former Federation; or

(II)any of the Governments of the Territories which comprised the former Federation immediately before he joined the service of the Government of the former Federation and was not ordinarily resident in Zimbabwe at the time when he first became entitled to such pension; or

(III)the State at the time he first became entitled to such pension;

(iii)if a pension or annuity, other than a pension or annuity granted in respect of employment by the State or the Government of the former Federation, was granted for service or employment performed both within and outside Zimbabwe, only that part of the pension or annuity which bears the same proportion to the whole of the pension or annuity as the period of the person’s service or employment within Zimbabwe bears to the whole of the period of the person’s service or employment for which the pension or annuity was granted shall be deemed to be derived from a source within Zimbabwe.For the purposes of this paragraph—

(I)a pension granted to a member of the Public Service of the former Federation in pursuance of the dissolution of the former Federation shall be deemed to have been granted to him by the Government of the former Federation;

(II)a pension which devolves upon another person by reason of the death of a person who was in receipt of a pension from the Government of the former Federation shall not be deemed to be from a source within Zimbabwe if the pension receivable by the deceased person at the time of his death was not derived or deemed to be derived from a source within Zimbabwe;

(f)in the circumstances specified in subsections (6) and (7).[paragraph (f) added by section 5(a) of Act 1 of 2019 with effect from 1 January 2019]

(2)An amount derived from a source outside Zimbabwe by way of interest or dividends on securities which is received by or accrues to or in favour of a person or would, had it been derived from a source within Zimbabwe, be deemed in terms of section ten to be income received by or accruing to or in favour of a person shall, if the person is ordinarily resident in Zimbabwe at the time the amount is so received or so accrues or is deemed to be so received or to so accrue, be deemed to be income from a source within Zimbabwe:Provided that—

(i)any amount so received or accrued in any year of assessment by way of income arising from securities referred to in paragraph (f) of the definition of “securities” in subsection (1) of section two—

(a)shall, notwithstanding section seven, be charged to tax in such manner and at such rates as may be fixed by the charging Act relating to that year of assessment; and

(b)shall not reduce any assessed loss which the taxpayer would have had in that year of assessment if such amount had not been received by or accrued to him;

(ii)for the purposes of this Act the amount of any credit which, in terms of the laws of any other country, a taxpayer is entitled to claim in respect of income referred to in proviso (i) shall be deemed to constitute such income and shall be deemed to have accrued to such taxpayer.

(3)Any amount received or accrued by way of an annuity from any source outside Zimbabwe, the right to which was acquired by means of the payment by the annuitant of a sum of money or the disposal by the annuitant of an asset or by both those means, shall be deemed to be income from a source within Zimbabwe if the annuitant was ordinarily resident in Zimbabwe at the time the right to the annuity was acquired.

(4)An amount shall be deemed to have accrued to any person from a source within Zimbabwe if it has been received by or has accrued to or in favour of such person by virtue of the use in Zimbabwe of or the grant of permission to use in Zimbabwe, or the imparting of or the undertaking to impart any knowledge directly or indirectly connected with the use in Zimbabwe of—

(a)any patent, design, trade mark, copyright, model, plan, secret process or formula or any other property which, in the opinion of the Commissioner, is of a similar nature; or

(b)any motion picture film or television film or any sound recording or advertising matter used or intended to be used in connection with such film;

wheresoever such patent, design, trade mark, copyright, model, plan, secret process, formula, property, film, sound recording or advertising matter has been produced or made or such permission has been granted or such knowledge has been imparted or such undertaking has been given or payment for such use, grant of permission, imparting of knowledge or undertaking has been made or is to be made, and whether such payment has been made or is to be made by a person resident in or out of Zimbabwe.

(5)Any amount which is specifically required to be included in a person’s gross income in terms of paragraph (i) or (j) of the definition of “gross income” in subsection (1) of section eight shall be deemed to have been received by or accrued to such person from a source within Zimbabwe notwithstanding that such amount may have been recovered or recouped outside Zimbabwe.

(6)Any amount receivable by or on behalf a satellite broadcasting service domiciled outside Zimbabwe from persons resident in Zimbabwe in respect of the provision or delivery of television or radio programmes to those persons shall be deemed to be income from a source within Zimbabwe.[subsection (6) added by section 5(b) of Act 1 of 2019 with effect from 1 January 2019]

(7)Any amount receivable by or on behalf of an electronic commerce platform domiciled outside Zimbabwe from persons resident in Zimbabwe in respect of the provision or delivery of goods or services to those persons shall be deemed to be income from a source within Zimbabwe.[subsection (7) added by section 5(b) of Act 1 of 2019 with effect from 1 January 2019]

(8)In subsections (6) and (7)—“electronic commerce platform” means a service which by the use of a telecommunications service or electronic means (and whether mediated by computers, mobile telephones or other devices) sells and delivers goods and services to customers;“satellite broadcasting service” means a service which by means of a satellite (whether or not in combination with cable optical fibre or any other means of delivery) delivers television or radio programmes to persons having equipment appropriate for receiving that service.[subsection (8) added by section 5(b) of Act 1 of 2019 with effect from 1 January 2019]

12A. Taxation of certain income deemed to be from a source within Zimbabwe

(1)This section applies to the taxation of income deemed in terms of section 12(6) and (7) to be income from a source within Zimbabwe.

(2)Every person who provides services as a satellite broadcasting service, or provides or delivers goods and services as an electronic commerce platform, which receives revenues in excess of five hundred thousand dollars ($500 000,00) in any year of assessment from the provision or delivery of such goods or services to persons resident in Zimbabwe, shall pay tax on such revenues charged and levied at the rate specified in section 14(2)(k) of the Charging Act.

(3)Any amount so received or accrued in any year of assessment by way of income arising by virtue of section 12(6) and (7)—

(a)shall, notwithstanding section 7, be charged to tax in such manner and at such rates as may be fixed by the charging Act relating to that year of assessment; and

(b)shall not reduce any assessed loss which the taxpayer would have had in that year of assessment if such amount had not been received by or accrued to him or her.

(4)Sections 19A (“Non-resident companies: basis of charge to and determination of company tax”) and section 19B (“Meaning of “permanent establishment””) shall not apply to the taxation of income deemed to have accrued from a source within Zimbabwe in terms of section 12(6) and (7).[section 12A inserted by section 6 of Act 1 of 2019 with effect from 1 January, 2019]

13. Commissioner may approve of benefit funds and medical aid societies for the purposes of this Act

(1)For the purposes of this Act, the Commissioner may, in respect of each year of assessment, approve of a benefit fund subject to such limitations or conditions as he may determine if he is satisfied that such fund—

(a)is a permanent fund, other than—

(i)a pension fund; or

(ii)a medical aid society; or

(iii)a fund registered or provisionally registered as a provident fund under the Pension and Provident Funds Act [Chapter 24:09];

and

(b)is bona fide established for the purpose of providing—

(i)sickness, accident or unemployment benefits for its members; or

(ii)benefits for the widows, children, dependants or nominees of deceased members.

(2)For the purposes of this Act, the Commissioner may, in respect of each year of assessment, approve of a medical aid society or scheme subject to such limitations or conditions as he may determine if he is satisfied that it is a permanent society or scheme bona fide established for the purpose of providing benefits for its members and their dependants in respect of expenditure incurred on medical, dental or optical treatment, including treatment prescribed by a medical or dental practitioner, the provision of drugs for medical, dental or optical purposes, the provision of medical, surgical, dental or optical appliances or the provision of ambulance services.

14. Exemptions

(1)There shall be exempt from income tax the amounts specified in the Third Schedule.

(2)The exemptions provided by paragraphs 1 and 2 of the Third Schedule shall not extend to the salaries, wages, allowances, other remuneration or pensions of persons employed by any local authority, society, institution, company, association or statutory corporation specified in those paragraphs although the same may be paid wholly or in part out of the revenues or funds thereof.

(3)The exemptions provided by paragraphs 9, 10, and 11 of the Third Schedule shall not apply in respect of any portion of an annuity paid out of the amounts specified in those paragraphs.

15. Deductions allowed in determination of taxable income

(1)For the purpose of determining the taxable income of any person, there shall be deducted from the income of such person the amounts allowed to be deducted in terms of this section:Provided that—

(a)When, owing to a variation in the rate of exchange of currency between Zimbabwe and any other country, the amount actually paid in Zimbabwean currency differs from the amount of the liability that had been incurred prior to the variation in the rate of exchange—

(i)the amount to be deducted shall be the said amount actually paid in Zimbabwean currency

(ii)if the incurring of the liability and the payment therefor occur in different years of assessment, effect shall be given to the increase or reduction in the amount in the year of assessment in which the amount was paid.

(b)in a case where a person earns income from trade and investment and income from employment, any amounts allowed to be deducted in terms of this section shall only be claimed in respect of the income to which they relate;

(c)in a case where a person earns income from mining operations and income from other trade and investment, any amounts allowed to be deducted in terms of this section shall only be claimed in respect of the income to which they relate.[proviso substituted by Act 18 of 2000]

(2)The deductions allowed shall be—

(a)expenditure and losses to the extent to which they are incurred for the purposes of trade or in the production of the income except—

(i)to the extent to which they are expenditure or losses of a capital nature; or

(ii)expenditure that constitutes prepayment for goods, services or benefits that will be used up in any subsequent year of assessment (in which event the expenditure will be allowed proportionately over the years of assessment in which the goods, services or benefits are used up).

[paragraph substituted by Act 1 of 2018]

(b)expenditure incurred during the year of assessment on—

(i)repairs to articles, implements, machinery and utensils used and property occupied for the purposes of trade; and

(ii)repairs resulting from the letting of property;

(c)the allowances in respect of—

(i)commercial buildings, farm improvements, fencing, industrial buildings, railway lines, staff housing and tobacco barns acquired or constructed and in both cases used by the taxpayer for the purposes of his trade;

(ii)articles, implements, machinery and utensils belonging to and used by the taxpayer for the purposes of his trade;

(iii)training buildings and training equipment;

which are provided in the Fourth Schedule;

(d)

(i)an allowance in respect of any premium or consideration in the nature of a premium paid by any taxpayer—

(A)for the right of use or occupation of land or buildings used or occupied for the purposes of trade or in the production of income; or

(B)for the right of use of plant or machinery used for the purposes of trade or in the production of income; or

(C)for the right of use of any patent, design, trade mark, copyright, model, plan, secret process or formula or any other property which in the opinion of the Commissioner is of a similar nature, if such patent, design, trade mark, copyright, model, plan, secret process or formula or other property is used for the purposes of trade or in the production of income; or

(D)for the right of use of any motion picture film or television film, sound recording or advertising matter connected with such film or recording if such film, sound recording or advertising matter is used for the purposes of trade or in the production of income; or

(E)for the imparting of or the undertaking to impart any knowledge directly or indirectly connected with the use of any such plant or machinery, patent, design, trade mark, copyright, model, plan, secret process or formula or other property as aforesaid, film, sound recording or advertising matter:Provided that—

(i)the allowances under subparagraph A, B, C or D shall not exceed for any year of assessment such portion of the amount of the premium or consideration so paid as is equal to the said amount divided by the number of years for which the taxpayer is entitled to the use or occupation, or one-tenth of the said amount, whichever is the greater;

(ii)if in any case the right of use or occupation of any property referred to in subparagraph A, B, C or D is granted for an initial period which may be extended or renewed for a further period or periods, the period for which the taxpayer is entitled to the use or occupation shall be deemed to be the initial period only;

(iii)in any case where the agreement granting the use or occupation of any property referred to in subparagraph A, B, C or D is silent or indefinite as to the period of use or occupation, the period of such agreement shall be deemed to be a period of ten years;

(iv)the allowance under subparagraph E shall not exceed for any year of assessment that portion (not being less than one-tenth) of the amount of the premium or consideration so paid as the Commissioner may allow having regard to the period during which the taxpayer will enjoy the right to use such plant or machinery, patent, design, trade mark, copyright, model, plan, secret process or formula or other property as aforesaid, film, sound recording or advertising matter and any other circumstances which in the opinion of the Commissioner are relevant;

(v)if the land or buildings referred to in this paragraph are used or occupied by the taxpayer for the purposes of his trade or in the production of income and for other purposes, the allowance under this paragraph shall be reduced by such amount as the Commissioner, in the circumstances, considers fair and reasonable;

(vi)where the taxpayer acquires the ownership of any land or buildings, plant or machinery, patent, design, trade mark, copyright, model, plan, secret process or formula or other property, motion picture film or television film, sound recording or advertising matter in respect of which allowance has been made in terms of this paragraph, then from the year of assessment following that in which he acquires such ownership he shall cease to be entitled to any allowance under this paragraph in respect thereof;

(ii)for the purposes of this paragraph, the amount of any premium or consideration in the nature of a premium shall be reduced by the total amount of any similar allowance made under any previous law:Provided that for the purposes of the calculation of the annual allowance in terms of proviso (i) to subparagraph (i) the amount of the premium or consideration shall not be reduced;

(e)

(i)an allowance in respect of any expenditure actually incurred by the taxpayer in pursuance of an obligation to effect improvements on land or to buildings incurred under any agreement whereby the right of use or occupation of the land or buildings is granted by any other person, where the land or buildings are used or occupied for the purposes of trade or in the production of income:Provided that—

(i)the aggregate of the allowances under this paragraph shall not exceed the amount stipulated in the agreement as the value of the improvements or as the amount to be expended on the improvements or, if no amount is so stipulated, an amount representing in the opinion of the Commissioner the fair and reasonable value of the improvement;

(ii)any such allowance shall not exceed for any year of assessment such portion of the aggregate of the allowances under this paragraph as is equal to the said aggregate divided by the number of years (calculated from the date on which the improvements are first used or occupied for the purposes of trade or in the production of income) for which the taxpayer is entitled to the use or occupation, or one-tenth of the said aggregate, whichever is the greater, and if the taxpayer is entitled to such or occupation for an indefinite period, he shall be deemed, for the purposes of this paragraph, to be entitled to such use or occupation for a period of ten years;

(iii)if the land or buildings referred to in this paragraph are used or occupied by the taxpayer for the purposes of his trade or in the production of income and for other purposes, the allowance under this paragraph shall be reduced by such amount as the Commissioner, in the circumstances, considers fair and reasonable;

(iv)in any case where such agreement is for an initial period which may be extended or renewed for a further period or periods, the period of such agreement shall be deemed to be the initial period only;

(v)where the taxpayer acquires the ownership of improvements in respect of which an allowance has been made under this paragraph, then from the year of assessment following that in which he acquires such ownership he shall cease to be entitled to any allowance under this paragraph in respect thereof;

(ii)for the purposes of this paragraph, the aggregate of the allowances determined under the provisions of proviso (i) to subparagraph (i) shall be reduced by the aggregate of any allowances of whatever nature made under a previous law in respect of the same improvements:Provided that for the purposes of the calculation of the annual allowance in terms of proviso (ii) to subparagraph (i) the aggregate of the allowances shall not be so reduced;

(f)

(i)in respect of income from mining operations, the allowances and deductions for which provision is made in the Fifth Schedule in lieu of the allowances and deductions provided in paragraphs (c), (d), (e) and (t);Provided that an allowance or deduction in terms of this subparagraph may be claimed in respect of two or more mining locations together, whether or not the expenditure or losses are attributable to any one or more mining locations concerned, where the Commissioner is satisfied that the mining operations conducted on the mining locations are inseparable or substantially interdependent, that is to say—

(i)both or all of the mining locations are held by the same taxpayer; and

(ii)the mineral or minerals produced at the locations are subjected to an integrated process of beneficiation under the control of the taxpayer.

[subparagraph (i) amended by Act 18 of 2000, by Act 10 of 2003 and by section 7 of Act 1 of 2019 with effect from the year of assessment beginning on 1 January 2019]

(ii)where the taxpayer is a miner, any expenditure (other than expenditure in respect of which a deduction is allowable in terms of paragraph (a)), which is proved to the satisfaction of the Commissioner to have been incurred during the year of assessment by the taxpayer on surveys, boreholes, trenches, pits and other prospecting and exploratory works undertaken for the purpose of acquiring rights to mine minerals in Zimbabwe or incurred on a mining location in Zimbabwe, together with any other expenditure (other than expenditure referred to in paragraph (a) of the definition of “capital expenditure” in paragraph 1 of the Fifth Schedule) which, in the opinion of the Commissioner, is incidental thereto:Provided that the taxpayer may elect (which election shall be binding) that the expenditure be—

(a)allowed in the year of assessment in which it is incurred; or

(b)carried forward and allowed against income from mining operations in any subsequent year of assessment.For the purposes of this subparagraph—“miner” means any person who at the time the expenditure was incurred was—

(a)the owner, tributor or option holder of a mining location; or

(b)the holder of a prospecting licence issued or an exclusive prospecting order granted in terms of the Mines and Minerals Act [Chapter 21:05];

(iii)[subparagraph repealed by Act 1 of 2014]

(g)the amount of any debts due to the taxpayer to the extent to which they are proved to the satisfaction of the Commissioner to be bad, if such amount is included in the current year of assessment or was included in any previous year of assessment in the taxpayer’s income either in terms of this Act or a previous law;[paragraph substituted by Act 10 of 2009]

(h)an amount to be determined in accordance with the Sixth Schedule in respect of contributions made in the year of assessment to a benefit or pension fund or the Consolidated Revenue Fund:Provided that no contribution to a retirement annuity fund shall be allowed as a deduction to a member of such fund who was not ordinarily resident in Zimbabwe at the time he made the contribution unless—

(i)he was ordinarily resident in Zimbabwe at the time he became a member of the fund; and

(ii)he became a member of the fund before the 1st April 1967; and

(iii)no amount in respect of the contribution is allowed as a deduction in terms of any law imposing a tax on income which is in force in a country other than Zimbabwe;

(i)the amount of any arrear contributions which are paid by the taxpayer in respect of past service with his employer to a pension fund, other than a retirement annuity fund, or to the Consolidated Revenue Fund and which—

(i)do not exceed eight per centum of the aggregate of his annual emoluments as defined in paragraph 1 of the Sixth Schedule for any period ending on or before the 31st March, 1972, in respect of which the calculation of the arrear contributions payable was based; or

(ii)together with any amounts which have been allowed for the appropriate year of assessment as a deduction in terms of paragraph (h), do not, in relation to any period in respect of which the calculation of the arrear contributions payable was based, exceed—

(A)if the period commences on or after the 1st April, 1972, and ends on or before the 31st March, 1975, two thousand dollars per annum; or

(B)if the period commences on or after the 1st April, 1975, and ends on or before the 31st March, 1988, two thousand four hundred dollars per annum;

(C)if the period commences on or after the 1st April, 1988, and ends on or before the 31st March, 1991, three thousand dollars per annum;

(D)if the period commences on or after the 1st April, 1991, and ends on or before the 31st March, 1994, three thousand six hundred dollars per annum; or

(E)if the period commences on or after the 1st April, 1994, and ends on or before the 31st March, 1996, five thousand four hundred dollars per annum; or

(F)if the period commences on or after the 1st April, 1996, and ends on or before the 31st December, 1998, ten thousand dollars per annum; or

(G)if the period commences on or after the 1st January, 1999, and ends on or before the 31st December, 2000, fifteen thousand dollars per annum; or

(H)if the period commences on or after the 1st January, 2001, thirty thousand dollars per annum;

(I)if the period commences on or after the 1st January, 2009, one thousand eight hundred United States dollars per annum;[subparagraph inserted by Act 5 of 2009]

Provided that no deduction shall be allowed in terms of this paragraph in respect of contributions paid by a member of a partnership in respect of any period prior to the 1st April, 1995.[paragraph amended by Act 18 of 2000]

(j)the amount of any contributions paid to a medical aid society by an employer in respect of his employees or their dependents;

(k)in respect of income from the sale of crops or timber, or the sale of the right to reap crops or fell timber, which were growing on the land at the time of the acquisition of the ownership of such land by the taxpayer or in respect of income to which paragraph (h) of the definition of “gross income” in subsection (1) of section eight applies, an amount determined as follows—

(i)where such land was acquired by the taxpayer for valuable consideration, so much of the valuable consideration as the Commissioner thinks just and reasonable as representing the cost of such crops or timber;

(ii)where no valuable consideration was given by the taxpayer for such land, an allowance fixed by the Commissioner as representing the value of such crops or timber at the time that the taxpayer acquired such land;

(iii)where the taxpayer sells the crops or timber the amount to be deducted for any year of assessment shall be the proportion attributable to the crops or timber sold during that year;

(l)in respect of income from the sale by the taxpayer of crops or timber, the right to reap or fell and dispose of which was not acquired with the land on which the crops or timber were grown, so much of the consideration for which the crops or timber were acquired as is attributable to the amount of the crops or timber sold by the taxpayer in the year of assessment;

(m)the amount of any expenditure incurred by the taxpayer during the year of assessment in carrying out experiments and research relating to his trade, other than capital expenditure on plant, machinery, land or premises or on the acquisition by the taxpayer of rights, whether for the purpose of his trade or otherwise;

(n)any sum contributed by the taxpayer during the year of assessment in respect of expenditure incurred by any other person to which paragraph (m) would have applied had the expenditure been incurred by the taxpayer:Provided that the deduction shall not exceed an amount arrived at by applying the following formula—A × B / Cin which—A represents the amount of the contribution by the taxpayer;B represents the amount of the expenditure incurred by the other person referred to in this paragraph which would have been allowed as a deduction in terms of paragraph (m) had it been incurred by the taxpayer;C represents the amount of the expenditure which is incurred by the other person referred to in this paragraph in carrying out experiments and research;

(o)an amount equal to the sum contributed by the taxpayer during the year of assessment to a scientific or educational society or institution or other like body of a public character approved by the Commissioner if the taxpayer has stipulated that the sum must be utilized by such society, institution or body, as the case may be, solely for the purpose of industrial research or scientific experimental work connected with the trade of the taxpayer;[paragraph amended by Act 15 of 2002 and Act 10 of 2009]

(p)any sum contributed by the taxpayer during the year of assessment in the form of a grant, bursary or scholarship to enable any person not connected with the taxpayer to take a course of technical education related to the trade of such taxpayer at any educational institution.For the purposes of this paragraph—“director” does not include a director—

(a)whose time, in the opinion of the Commissioner, is wholly occupied in the service of the company; and

(b)who is unable, either directly or indirectly, to control more than five per centum of the voting rights attaching to all classes of the shares of the company;

“person not connected with the taxpayer” means a person who is not—

(a)the taxpayer, the spouse or a near relative of the taxpayer or a near relative of the spouse of the taxpayer; or

(b)in the case where the taxpayer is a company—

(i)an individual controlling the company or the spouse or near relative or nominee of an individual controlling the company or a near relative or nominee of the spouse of an individual controlling the company; or

(ii)a director of the company or the spouse or near relative or nominee of a director of the company or near relative or nominee of the spouse of a director of the company;

(q)any amount paid by way of an annuity, allowance or pension during the year of assessment by the taxpayer—

(i)to a former employee who has retired from the taxpayer’s employment on the grounds of illhealth, infirmity or old age; or

(ii)to a former partner who has retired from the former partnership on the grounds of ill-health, infirmity or old age; or

(iii)to any person who is dependent for his maintenance upon a former employee or former partner of such taxpayer or, where such former employee or former partner is deceased, was so dependent immediately prior to his death:Provided that—

(i)the deduction allowable in terms of this paragraph shall not exceed—

(a)under subparagraph (i), an amount of five hundred United States dollars in respect of any one former employee or, if that former employee received any amount by way of a pension or annuity during the year of assessment from any fund, wherever situated, of which the former employee contributed in respect of that former employee, an amount of five hundred United States dollars reduced by the amount of that pension or annuity; or[proviso amended by Act 5 of 2009]

(b)under subparagraph (ii), an amount of two hundred United States dollars in respect of any one former partner or, if that former partner received any amount by way of a pension or annuity during the year of assessment from any fund, wherever situated, to which the former partnership contributed in respect of that former partner, an amount of two hundred United States dollars reduced by the amount of that pension or annuity; or[proviso amended by Act 5 of 2009]

(c)under subparagraph (iii), an amount of two hundred United States dollars in respect of persons so dependent on any one retired or deceased former employee or former partner, as the case may be, or, if those persons so dependent received any amount by way of pensions or annuities during the year of assessment from any fund, wherever situated, to which the former employer or former partnership, as the case may be, contributed in respect of that retired or deceased former employee or former partner, as the case may be, two hundred United States dollars reduced by the amount of those pensions or annuities;[proviso amended by Act 5 of 2009]

(ii)no deduction shall be allowed in terms of this paragraph in respect of a former employee if the remuneration paid to the former employee during his employment with the taxpayer was a domestic or private expense of the taxpayer.For the purposes of this paragraph—“former partner”, in relation to a taxpayer, means a person who was a member of a partnership—

(a)of which the taxpayer was a member; or

(b)of which any other person with whom the taxpayer is in partnership was a member; or

(c)which was a predecessor of any partnership of which the taxpayer is or was a member;

and “former partnership” shall be construed accordingly;

(r)any amount paid by the taxpayer during the year of assessment, without any consideration whatsoever, to—

(i)the National Scholarship Fund established in terms of the Audit and Exchequer Act [Chapter 22:03]; or

(ii)the National Bursary Fund established in terms of the Audit and Exchequer Act [Chapter 22:03];

(iii)a charitable trust administered by—

(A)the Minister responsible for social welfare; or

(B)the Minister responsible for health;

in his capacity as such, or by any official in his Ministry, in his official capacity;[subparagraph inserted by Act 13 of 1996]

(r1)any amount paid by the taxpayer during the year of assessment, without any consideration whatsoever, to the State or to a fund for any one or more of the following purposes approved by the Minister responsible for health—

(i)the purchase of medical equipment for a hospital operated by the State, a local authority or a religious organisation; or

(ii)the construction, extension or maintenance of a hospital operated by the State, a local authority or a religious organisation; or

(iii)the procurement of drugs, including anti-retroviral drugs, to be used in a hospital operated by the State, a local authority or a religious organisation:[subparagraph substituted by Act 29 of 2004]

Provided that the deduction allowable under this paragraph shall not exceed one hundred thousand United States dollars;[proviso amended by Act 3 of 2009]

(r2)any amount paid by the taxpayer during the year of assessment, without any consideration whatsoever, to a research institution approved by the Minister responsible for higher or tertiary education:Provided that the deduction allowable under this paragraph shall not exceed one hundred thousand United States dollars;[proviso amended by Act 3 of 2009]

(r3)any amount paid by the taxpayer during the year of assessment, without any consideration whatsoever, to the State or to a fund for any one or more of the following purposes approved by the Minister responsible for education—

(i)the purchase of educational equipment for a school operated by the State, a local authority or a religious organization; or

(ii)the construction, extension or maintenance of a school operated by the State, a local authority or a religious organization; or

(iii)the procurement of books or other educational materials to be used in a school operated by the State, a local authority or a religious organisation:

Provided that the deduction allowable under this paragraph shall not exceed one hundred thousand United States dollars.[paragraph inserted by Act 15 of 2002 and amended by Act 3 of 2009]

(r4)any amount paid by the taxpayer during the year of assessment, without any consideration whatsoever, to the Public Private Partnership Fund:Provided that the deduction allowable under this paragraph shall not exceed fifty thousand United States dollars[paragraph inserted by Act 10 of 2003 and amended by Act 5 of 2009]

(r5)any amount paid by the taxpayer during the year of assessment, without any consideration whatsoever, to the Destitute Homeless Persons Rehabilitation Fund, being a fund established by the Ministry of Finance under section 30 of the Audit and Exchequer Act to alleviate the condition of destitute homeless persons:Provided that the deduction allowable under this paragraph shall not exceed fifty thousand United States dollars;[paragraph inserted by Act 29 of 2004 and amended by Act 5 of 2009]

(s)any subscription paid during the year of assessment by the taxpayer in respect of his continued membership for any period of any business, trade, technical or professional association;

(t)in respect of income from a business, the amount of any expenditure which—

(i)is incurred by the taxpayer not more than eighteen months before beginning a business in the course of establishing the business; and

(ii)would have been allowed as a deduction had it been incurred after beginning the business; and

(iii)is claimed as a deduction in the year of assessment in which the business is commenced;

(u)in respect of income derived by the taxpayer from the carrying on of a trade, an amount equal to the value, determined for the purposes of subparagraphs (i) and (iv) of paragraph (h) of the definition of “gross income” in subsection (1) of section eight, of the trading stock belonging to the taxpayer which had not been disposed or for which was attached in pursuance of an order of court at the end of the immediately preceding year of assessment. For the first year of assessment under this Act, the value of the trading stock included in the gross income of the taxpayer for the last year of assessment in terms of the previous law or which would have been included had he been liable for tax, shall be the value of the trading stock to be deducted for the purposes of this paragraph;

(v)in respect of income derived by the taxpayer during any year of assessment from the carrying on of a trade, an amount equal to the amount which the Commissioner considers was at the date it was brought to hand, or at the date it was acquired, whichever the Commissioner may decide, the fair and reasonable value of such of the trading stock of the taxpayer as was acquired by the taxpayer otherwise then in the ordinary course of trade:Provided that in no case other than that of inheritance by a beneficiary in a deceased estate shall the deduction exceed the amount which would have been allowed as a deduction to the person from whom the stock was acquired had it been sold by such person in the ordinary course of trade;

(w)any expenditure not exceeding two thousand five hundred United States dollars incurred by the taxpayer during the year of assessment in attending during that year—[paragraph amended by Act 3 of 2009]

(i)not more than one convention which, in the opinion of the Commissioner, was in connection with the trade carried on by the taxpayer; or

(ii)not more than one trade mission, approved by the Minister, in connection with the trade carried on by the taxpayer:

Provided that—

(i)if any such convention or trade mission commences in one year of assessment and ends in another, then for the purposes of this paragraph the convention or trade mission shall be deemed to have been attended, and the expenditure shall be deemed to have been incurred, in the year of assessment in which the convention or trade mission ends;

(ii)where the person attending such convention or trade mission is a member of a partnership and the expenditure has been incurred by the partnership, the deduction shall be allowed in respect of one convention or trade mission for each partner to the extent of the expenditure incurred by the partnership in connection with the attendance or three thousand six hundred dollars, whichever is the lesser, and shall be allowed to that person and to the other members of that partnership in the same proportion as each member shares in the profits or losses of the partnership during the year of assessment in which the expenditure was incurred or deemed to have incurred in terms of proviso (i);

(x)[paragraph repealed by Act 17 of 1995]

(y)in respect of income derived by a co-operative agricultural company or co-operative society—

(i)any amount distributed during the year of assessment by way of discounts, rebates or bonuses granted by the company or society to shareholders, members or other persons in respect of amounts paid or payable by or to them on account of their transactions with the company or society; and

(ii)an amount calculated at the rate of one dollar for each dollar by which the taxable income of such company or society, before the deduction of any allowance in term of this subparagraph, is less than five hundred United States dollars:[subparagraph amended by Act 18 of 2000 and Act 5 of 2009]Provided that—

(i)if, in the opinion of the Commissioner, the company or society and one or more other co-operative agricultural companies or co-operative societies are under the management or control of the same persons, the deduction allowable under this subparagraph shall not exceed an amount determined by applying the formula—A / A + B × Cin which—A represents the taxable income of the company or society before the deduction of any allowance in terms of this subparagraph;B represents the total of the taxable income of such other companies or societies before the deduction of any allowance in terms of this subparagraph;C represents the amount that would have been calculated in terms of this subparagraph if such amount had been calculated on the total of the taxable incomes, before the deduction of any allowances in terms of this subparagraph, of the company or society and such other companies or societies;

(ii)the deduction allowable in terms of this subparagraph shall not exceed the taxable income of the company or society calculated before the deduction of any allowance in terms of this subparagraph;

For the purposes of this paragraph—“co-operative agricultural company” means a co-operative company which is registered under the Companies Act [Chapter 24:03] and which by its articles provides that only—

(a)a person carrying on farming operations for the benefit of himself in Zimbabwe, either exclusively or in conjunction with some other person or with some other business, profession or occupation; or

(b)another co-operative agricultural company; or

(c)a co-operative society;

shall be admitted to membership;“co-operative society” means a co-operative society which is registered in terms of the Co-operative Societies Act [Chapter 24:05];

(z)in addition to the deductions allowable in terms of this subsection, a farmer shall be entitled in respect of his farming operations to the deductions for which provision is made in the Seventh Schedule;

(aa)the amount of any costs, taxed by the registrar of the High Court during the year of assessment and not recovered from any source whatsoever, incurred by the taxpayer in connection with an appeal made in terms of section sixty-five, if—

(i)the appeal is allowed in full; or

(ii)the appeal is allowed to a substantial degree and the High Court or the Special Court, as the case may be, directs that such costs shall be allowed as a deduction in terms of this paragraph:Provided that—

(i)if any determination of the High Court or the Special Court is reversed, affirmed or amended by the Supreme Court on an appeal in terms of section sixty-six, no deduction shall be made in terms of this paragraph unless the decision of the Supreme Court is wholly or substantially favourable to the taxpayer and the Supreme Court directs that such costs shall be allowed as a deduction in terms of this paragraph;

(ii)no deduction shall be made in terms of this paragraph until the time for noting an appeal in terms of section sixty-six has lapsed or any appeal so noted has been heard and determined and any costs shall be deemed not to have been taxed until such lapse or determination;

(bb)the amount of any costs, taxed by the registrar of the Supreme Court during the year of assessment and not recovered from any source whatsoever, incurred by the taxpayer in connection with an appeal made in terms of section sixty-six, if—

(i)the decision of the Supreme Court is wholly or substantially favourable to the taxpayer; and

(ii)the Supreme Court directs that such costs shall be allowed as a deduction in terms of this paragraph.

(cc)if the taxpayer so elects, an allowance of such amount as may be fixed by the Commissioner in respect of such expenditure or losses, not being expenditure or losses of a capital nature, as he considers will be incurred by the taxpayer after the end of the year of assessment and will be directly related to gross income received by or accrued to the taxpayer during the year of assessment in respect of services to be rendered or goods to be delivered after the end of the year of assessment:Provided that—

(i)such allowance shall be reduced by the amount of any expenditure or losses, not being expenditure or losses of a capital nature, which are incurred during the year of assessment and which are directly related to gross income to be received or to accrue after the end of the year of assessment in respect of services rendered or to be rendered or goods delivered or to be delivered;

(ii)such allowance, after any reduction in terms of proviso (i), shall be included in the income of the taxpayer for the following year of assessment.

(dd)in addition to the deductions allowable in terms of this subsection a person operating a business in a growth point area shall be entitled for the year of assessment beginning on the 1st April, 1981, and any subsequent year of assessment in respect of such operations to the deductions for which provision is made in the Fourteenth Schedule;

(ee)in respect of petroleum operations, the allowances and deductions for which provision is made in the Twentieth Schedule in lieu of the allowances and deductions provided for under the other paragraphs of this subsection.

(ff)in respect of special mining lease operations, the allowances and deductions for which provision is made in the twenty-Second Schedule in lieu of the allowances and deductions provided for under the other paragraphs of this subsection;

(gg)the amount of any export-market development expenditure incurred by the taxpayer during the year of assessment, together with an amount equal to one hundred per centum of such expenditure.For the purposes of this paragraph—“export market development expenditure” means expenditure, not being expenditure of a capital nature, that is proved to the satisfaction of the Commissioner to have been incurred wholly or exclusively for the purpose of seeking opportunities for the export of goods from Zimbabwe or of creating or increasing the demand for such exports and, without derogation from the generality of the foregoing, includes expenditure for any one or more of the following purposes—

(i)research into, or the obtaining of information relating to, markets outside Zimbabwe;

(ii)research into the packaging or presentation of goods for sale outside Zimbabwe;

(iii)advertising goods outside Zimbabwe or otherwise securing publicity outside Zimbabwe for goods;

(iv)soliciting business outside Zimbabwe or participating in trade fairs;

(v)investigating or preparing information, designs, estimates or other material for the purpose of submitting tenders for the sale or supply of goods outside Zimbabwe;

(vi)bringing prospective buyers to Zimbabwe from outside Zimbabwe;

(vii)providing samples of goods to persons outside Zimbabwe;

“goods” means anything that has, in Zimbabwe, been manufactured, produced, grown, assembled, bottled, canned, packed, graded, processed or otherwise dealt with in such manner as the Commissioner may approve;[paragraph re-inserted by Act No. 27 of 2001]

(hh)the amount of any tobacco levy paid in the year of assessment in terms of section thirty-six A;[paragraph re-inserted by Act No. 27 of 2001]

(jj)an amount representing the fair value of any stock, shares, debentures, units or other interest paid or given by the taxpayer to an employee of the taxpayer or for the benefit of an employee of the taxpayer pursuant to an approved employee share ownership scheme or trust.[paragraph inserted by Act No. 27 of 2001][Please note: numbering as in original.]

(kk)an amount paid by the taxpayer during the year of assessment in respect of expenditure approved by the Minister responsible for local government at the request of the local authority concerned for the maintenance of any one or more of the following things managed or owned by the local authority—

(i)buildings;

(ii)roads;

(iii)bridges;

(iv)sanitation works;

(v)water works;

(vi)public parks;

(vii)any other utility, amenity or item of infrastructure approved by the Minister responsible for local government:

Provided that the deduction allowable under this paragraph shall not exceed fifty thousand United States dollars.[paragraph inserted by Act 10 of 2003 and amended by Act 5 of 2009]

(ll)the amount—

(i)of any contribution or donation paid by a taxpayer in the year of assessment to a community share ownership trust or scheme established by the taxpayer in compliance with the Indigenisation and Economic Empowerment Act [Chapter 14:33] (No. 14 of 2007);

(ii)equivalent to the value of the shares of a corporate taxpayer that are lent in the year of assessment to an indigenisation partner of the taxpayer pursuant to a corporate vendor-financed loan (this deduction to be allowed in equal annual instalments over the period of the loan);

(iii)interest payable by an indigenisation partner in the year of assessment on any loan advanced to him or her to purchase shares in the company of which he or she is an indigenous partner;

For the purposes of this paragraph—“community share ownership trust or scheme” means such a scheme approved in terms of the Indigenisation and Economic Empowerment (General) Regulations, 2010, published in statutory Instrument 21 of 2010;“corporate vendor-financed loan” means a loan of shares in a corporate taxpayer to an aspirant shareholder of that taxpayer which are purchased by the aspirant shareholder by means of dividends forgone on those shares in favour of the taxpayer;“indigenisation partner” means an indigenous person who benefits (whether as an employee or in any other capacity) under an indigenisation implementation plan approved in terms of the Indigenisation and Economic Empowerment (General) Regulations, 2010, published in statutory Instrument 21 of 2010.[paragraph (ll) inserted by Act 1 of 2014]

(mm)the amount of a lump sum contribution made by an employer in the year of assessment concerned towards capitalising a pension fund of which his or her employees are members, that is to say, an amount which the Commissioner is satisfied, on the basis of—

(i)an actuarial certificate furnished to the Commissioner by or on behalf of the employer; and

(ii)a certificate by the Minister (issued after consultation with Insurance and Pensions Commission) to the effect that, having taken the actuarial certificate into account, the Minister is satisfied that the lump sum contribution made by the employer will result in increased pensions or benefits for persons who are or have been members of the pension fund, which increased pensions or benefits will be fair and not unfairly discriminate against or unfairly prejudice any class of persons who are or have been members of the pension fund;

For the purposes of this paragraph—“actuarial certificate” means a certificate issued by an actuary;“actuary” means a person who is a member or fellow of an institute, faculty, society or association of actuaries approved by the Pensions and Insurance Commission for the purposes of the insurance Act [Chapter 24:07];“Insurance and Pensions Commission” means the Insurance and Pensions Commission established by section 3 of the Insurance and Pensions Commission Act [Chapter 24:21] (No. 7 of 2000);“pension fund” means a pension fund registered in terms of the Pension and Provident Funds Act [Chapter 24:09].[paragraph inserted by Act 11 of 2014]

(nn)the amount of any expenditure related to technical and support services that is incurred by the taxpayer who is an anchor company to an outgrower farmer during the year of assessment, together with an amount equal to fifty per centum of such expenditure. For the purposes of this paragraph—“anchor company” means a company that provides inputs, agronomic advice and marketing opportunities to a group of outgrower farmers and small or medium enterprises;“expenditure related to technical and support services” means such items of expenditure as the Minister shall specify in regulations made under section 90;“outgrower farmer” means a farmer who is a party to a scheme or contract whereunder an anchor company supplies inputs, agronomic advice and marketing opportunities in return for the outgrower farmer selling or delivering the contract or scheme produce to the anchor company or other person designated by the scheme or contract;[paragraph inserted by Act 1 of 2018 and numbered (ll) instead of (nn) in error. Law Reviser][numbering corrected by section 2 of Statutory Instrument 188 of 2018]

(3)Subject to this section, from the amount of income remaining after the deductions referred to in subsection (2) and sections seventeen and eighteen have been made, there shall be deducted any assessed loss determined in respect of the previous year of assessment:Provided that—

(i)no taxpayer who—

(a)has been adjudged or otherwise declared or become insolvent; or

(b)has made an assignment of his property or estate for the benefit of his creditors;

shall be entitled to carry forward an assessed loss incurred before the date he was adjudged or otherwise declared or become insolvent or made the assignment, as the case may be;

(ii)if during any year of assessment there is a change in the shareholding of a company with an assessed loss or in the shareholding of any company which directly or indirectly controls any company with an assessed loss and the Commissioner is satisfied that such change has been effected solely or mainly in pursuance of or in connection with any scheme for taking advantage of such assessed loss, no assessed loss incurred prior to that change shall be deductible.For the purposes of this proviso a company shall be deemed to be controlled by another company if the majority of the voting rights attaching to all classes of its shares are held directly or indirectly by such other company;

(iii)if the Commissioner decides that a company with an assessed loss (hereinafter called the old company)—

(a)was incorporated outside Zimbabwe; and

(b)carried on its principal business within Zimbabwe; and

(c)is about to be wound up voluntarily in its country of incorporation for the purpose of the transfer of the whole of its business and property wherever situate to a company which will be or has been incorporated under any law (hereinafter called the new company) for the sole purpose of acquiring the whole of the business and property wherever situate of the old company and where—

(I)the sole consideration for the transfer will be the issue to the members of the old company of shares in the new company in proportion to their shareholdings in the old company; and

(II)no shares in the new company will be available for issue to any persons other than members of the old company;

the new company shall be allowed as a deduction after the transfer referred to in paragraph (c) has been effected, the assessed loss of the old company;

(iv)where taxpayer, whether before, on or after the 1st April, 1991, has carried forward an assessed loss over two or more consecutive years of assessment—

(a)subject to paragraph (b), that part of the assessed loss which was determined in respect of the earliest such year shall be deducted first, then that part determined in respect of the next such year, and so on until—

(i)the entire assessed loss has been deducted; or

(ii)there is no further income against which to deduct the assessed loss, in which event, subject to provisos (i), (ii) and (iii), the balance of the assessed loss shall be carried forward to the next year of assessment;

(b)except in the case of an assessed loss or any part thereof arising from mining operations, no part of an assessed loss shall be deducted which was first determined in respect of a year of assessment more than six years before the year of assessment in which the deduction is made;

(v)if—

(a)a company which is incorporated under the Companies Act [Chapter 24:03] and which has an assessed loss is converted into a private business corporation; or

(b)a private business corporation with an assessed loss is converted into a company in terms of the Companies Act [Chapter 24:03];

and the Commissioner is satisfied that such conversion has not been effected solely or mainly in pursuance of or in connection with any scheme for taking advantage of the assessed loss, the new private business corporation or the new company, as the case may be, shall be allowed the assessed loss as a deduction after the conversion.[subsection amended by Act 13 of 1996]

(vi)in the case of a person engaged in mining operations in more than one mining location who has an assessed loss in respect of the year of assessment ending on the 31st December, 2000, and at the end of any subsequent year of assessment, no such assessed loss shall be allowed as a deduction unless the person concerned submits for the approval of the Commissioner a breakdown showing the extent to which such assessed loss is attributable to each of the locations concerned.[proviso (vi) inserted by Act 18 of 2000]

(4)Where in respect of any amount, a deduction would but for this subsection be allowable under more than one provision of this Act and whether it would be so allowable in respect of the same or different years of assessment, the taxpayer shall not be entitled to claim that such amount shall be deducted more than once and, where the deduction would but for this subsection be allowable under more than one provision of this Act in respect of the same year of assessment, the taxpayer shall elect under which one of those provisions he wishes to claim such amount as a deduction.

(5)No assessed loss attributable to petroleum operations, as defined in paragraph 1 of the Twentieth Schedule, shall be allowable as a deduction to the petroleum operator concerned in respect of any income accruing to him from any trade other than petroleum operations.

(6)No assessed loss shall be allowed as a deduction from income consisting of interest payable by—

(a)any bank, discount house or finance house registered or required to be registered in terms of the Banking Act [Chapter 24:20]; or

(b)any building society registered or required to be registered in terms of the Building Societies Act [Chapter 24:02];

in respect of any loan to or deposit with that bank, discount house, finance house or building society.

(7)No assessed loss, as defined in paragraph 1 of the twenty-Second Schedule, shall be allowable as a deduction to the holder of a special mining lease in respect of income other than income attributable to special mining lease operations, and no expenditure or loss in respect of any other trade carried on by him shall be allowable against income from special mining lease operations.

(8)No assessed loss attributable to business operations carried on by a taxpayer shall be allowable as a deduction from income received by or accruing to him under a contract of employment.[subsection inserted by Act 13 of 1996]

16. Cases in which no deduction shall be made

(1)Save as is otherwise expressly provided in this Act, no deduction shall be made in respect of any of the following matters—

(a)the cost incurred by any taxpayer in the maintenance of himself, his family or establishment;

(b)domestic or private expenses of the taxpayer, including expenses incurred in travelling between his home and the place at which he carries on a trade and, in the case of a taxpayer who carries on two or more trades which are distinct in nature, between the places at which such trades are carried on;

(c)any loss or expense which is recoverable under any insurance contract or indemnity;

(d)tax upon the income of the taxpayer or interest payable thereon, whether charged in terms of this Act or any law of any country whatsoever;

(d1)any amount of Intermediated Money Transfer Tax charged in terms of section 22G of this Act;[paragraph (d1) inserted by section 8 of Act 1 of 2019]

(e)income carried to a reserve fund or capitalized in any way;

(f)so much of any

Income Tax Act

Related documents

Income Tax Act

Chapter 23:06

Part I – Preliminary

1. Short title

2. Interpretation

2A. When persons deemed to be associates

2B. When person deemed to control company

Part II – Administration

3. ***

4. ***

5. Preservation of secrecy

Part III – Inccome tax

6. Levy of income tax

7. Calculation of income tax

8. Interpretation of terms relating to income tax

9. ***

10. Special circumstances in which income is deemed to have accrued

11. Special provisions in connection with income derived from assets in deceased and insolvent estates

12. Circumstances in which amounts are deemed to have accrued from sources within Zimbabwe

12A. Taxation of certain income deemed to be from a source within Zimbabwe

13. Commissioner may approve of benefit funds and medical aid societies for the purposes of this Act

14. Exemptions

15. Deductions allowed in determination of taxable income

16. Cases in which no deduction shall be made