Revisit Income Tax Bill

EXTORTION, shocking and outrageous, are the main words being used to describe Finance minister Tendai Biti’s proposed Income Tax Bill meant to widen environs for government revenue.

NewsDay Editorial

The Bill was gazetted over a month ago to amend the current Income Tax Act and if approved by Parliament and assented to by the President, the proposed law would be effective January 1 2014.

What has outraged companies and individuals is the broadening of the tax base from deemed source to residents’ base, meaning a departure from where only income from Zimbabwe or deemed to be from the country was taxable for both individuals and companies.

If the Bill is passed, it is proposing that on the residents’ basis, world-wide income would become taxable to net the diasporan and offshore investments and trading income. This will affect Zimbabweans working abroad.

The double taxation agreements (DTAs) remain in place and as such, only the difference between the Zimbabwean tax on foreign income and what has been taxed externally will be due to Zimra.

The scope of residence has also been widened for both companies and individuals to include physical presence in Zimbabwe for 183 days or having an abode or residence in the country to which typically non-resident Zimbabwean returns to, for even one day in the year (Diaspora net) or being a Government of Zimbabwe official or temporary resident with a work permit.

For companies, cross-border operations with a central head office in Zimbabwe will be deemed resident and cross border income of those firms is taxable in Zimbabwe.

The proposed new law has also specifically included “interest on foreign debt secured by Zimbabwean property or by Zimbabwe resident company” as deeming the lender to have resident income with that interest being income subject to company law (rates higher than withholding tax) and is silent on the inclusion of interest and dividends under the withholding tax section. So whether interest on any further external loans from 2014 and beyond will attract higher tax rates is not clear. This may have the negative effect of the lender expecting a tax cushion from the company making debt very expensive.

The Bill is antithetical to investment and good governance as it seeks to punish formally employed Zimbabweans in the Diaspora whose remittances to the country have been of immense importance to the stabilisation of the economy. It also penalises companies whose operations are above board.

It is estimated that about $4 billion is circulating in the informal sector and that government is losing out big time. Biti should come up with strategies and policies on how to tax the informal sector instead of continuing to milk the already over taxed, formally employed individuals and companies.


Biti’s Bill as it stands discourages honest business and should be revisited. We need a tax regime that promotes good corporate governance and social development, not on-the-hoof measures of this sort.

14 Comments

  1. biti must focus on reigning in on unaccounted diamond money rather burdening the already burdened honest citizens of zimbabwe

  2. Best wishes in the coming elections.

  3. Biti, be careful with some of these policies. It is as if you want to punish people for leaving for the diaspora yet we know that without these bold moves by these Zimbabweans, many people would have perished during 2008 due to hunger. The diaspora remittances have also kept the economy going and the best you can say is thank you to these people. There is a misconception that people who went to the diaspora took the easy way out of Zimbabwe’s problems, yet they sacrificed a lot and a lot was at stake. Families broke up, they worked 19 hours a day and the loneliness with no social support base was unbearable. They all want to come home, but there is nothing to come back home to. They look after whole clans and taxing them to death will only mean the death of these clans as well. We are tired of politicians who want an easy way out. Create employment in Zim, look for FDI and tax the Marange diamonds instead of burdening ordinary hard working Zimbabwean. With your ideas, we wonder if we want MDC in Government after all.

  4. How will they even collect the taxes

  5. zvenhando tichagara

    good lucky mr Biti, but kana ndiri ini yangu cash hamuione.

  6. give unto caesar

  7. Nhai Biti, you have failed to make Zimbnabweans in the disspora to Vote, tell me one reason why they should be Taxed if they cant exercise their constitutional right. To have a voice. You are crazy don’t do zvinhu zvinoita kuti party iruze. You are being trick nemaZANU to pass ridiculous bills at the expense of the reputation of the party. Muka Biti zvawaimboita sewakangwara wani

  8. I have been forced to swallow my words about Biti. Zimbabwe we are really in trouble topiswa kumberi nekusure. Zanu yakawora. MDC T madhaka.

  9. Ok Zimbabweans, How many times does this need to happen? We are complaining about these bills and come election time we vote in the same people that shit us! If I had my way it will be out with ZANU PF and MDC. Let’s vote in our own MP’s that do not come from these silly parties! Why are we allowing this?

    Let’s insist they pay taxes as well (the MP’s) and all this nonsense will end. Let me give you a simple example of being over taxed. Import a 2nd hand car in to Zim and these are the taxes you will pay
    – 1 Import Duty (It’s a Tax) +- 40%
    – 2 Sales Tax 15%
    – 3 Surtax if it’s older than the stipulated years 25%

    So that’s 3 taxes that are levied on one item. The total of taxes comes to about 80% of cost! That’s ridiculous.

    I admire the Egyptian in this regard, they can’t stand nonsense from government and government officials, it has killed their country and it’s killing ours at the moment.

    Down with Biti and all MPs that passed this bill!

  10. Biti wakuzobhowa chikwata manje! NXAA

  11. Down with person who is going to approve this bill

  12. Vakanyi vebasa.
    I am not surprised with what our brother Biti is upto.Its clear these guys leave their brains at home and go on to use their handlers’s.Alternatively it is unbriddled and rabid hunger for money.This could be coming from the usual snakes:IMF,EU,World Bank,etc,etc.No son of the soil could come up with such rubbish!Even the taxes on the Kombis etc,these could only have come from the devil himself!Guys next election vote wisely!!

  13. In shona we say,”makudo ndimamwe..”MDC-T no longer stand for the people.Both parties do not want the diaspora vote yet now they want to directly milk the same pple they deem outcast in the country’s democratic process.The sordid truth which hurts,-these taxes will be for their personal enrichment,as is the case currently- nothing for Zim’s development.Why r u taking the easy way comrade Biti??why?Create employment and tax from formal employment…u want to reap where u ddnt sow!Do u knw wht diasporeans have to go through to make it?I am disappointed in u comrades-Bhora Musango!!!!Nxa!

  14. I was just talking to my coworker about this today at Outback steak house. Don’t remember how in the world we landed on the topic in reality, they brought it up. I do recall eating a excellent fruit salad with cranberries on it. I digress

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