FINANCE ACT NO. 8 OF 2020.

By Bianca W. Mahere, Associate.

On the 28^th of October 2020, the Zimbabwean government gazetted a number of amendments to the Finance Act [Chapter 23:04].This amendment also seeks to introduce changes to the Income Tax Act [Chapter 23:06], the Capital Gains Tax Act [Chapter 23:04], the Mines and Minerals provisions under the Finance Act [Chapter 23:04] and the Companies and Other Business Entities [Chapter 24:31]. Set out below is a brief summary of the new developments brought about by the new amendment:

1. Part II- Amendments to Chapter 1 of the Finance Act [Chapter 23:04]

• Important to note is the amendment to section 14 and the Schedule to Chapter 1 of the Act. There is a change to the specified percentages deductible on taxable income of individuals. The new schedules provide for income in ZWL and USD. A person earning up to ZW$25 000 or US$350 has a 0% specified percentage, that means no tax is deducted from their income.20% is deducted from $25 001 to $75 000 ZWL earnings or US$351 to US$1 500 and so on. A person in the range of ZW$500 001 and more or US$15 001 and more will be liable to pay income tax of 40% of the income. This is with effect from 1 August 2020. On whether the government will refund you tax deducted from August 2020 to the date of gazetting of the new Act, I will leave you to ponder on that!

• Section 15 of the Finance Act has been amended. Subsection (b) is worth discussing.

Last month in October, we saw the introduction of the much awaited Victoria Falls Stock Exchange (VFEX). Under section 15 of the Finance Act, we see an introduction of Non- resident shareholders’ tax for dividend listed on the VFEX. The tax chargeable for dividend distributed from a security which, on the date of distribution, is listed in the official list kept by the VFEX is at a rate of five per centum. This is subject to the third schedule of the Taxes Act. It can be observed that this rate is much lower compared to other registered securities exchange whose rate is ten per centum or fifteen per centum. Good news to the VFEX shareholders.

• Section 22G has been amended with effect from 1 August 2020. The amendment is on Intermediated money transfer tax. The tax is now payable on a single transaction that is equivalent or exceeds:

1. ZW$2 500 000- a flat tax of $50 000 is charged.
2. US$100 000 –a flat tax of US$2 000 is charged.

These are some of the new changes affecting the Finance Act [Chapter 23:04] as noted in the first part of the amendment. In the following article we will look at the rest of Part II up to Part IV of the Act. These relate to Capital Gains Tax, Mines and Minerals and Companies and Other Entities.

Should you require any further information on the above please do not hesitate to contact us.

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