THE country’s income tax system is set for a major overhaul when proposed changes contained in the Income Tax Bill come into effect. Report by Mernat Mafirakurewa
The Bill seeks to repeal the Income Tax Act which was enacted in 1967.
According to the Income Tax Bill that was published last Friday, some of the proposed amendments entail shifting the source based system income taxation that prevails at the moment where tax is levied on income originated in Zimbabwe to a residence based taxable income.
Under the proposed system, the taxable income of a taxpayer resident in Zimbabwe will be the taxpayer’s income from all geographical sources within or outside the country.
“This Bill seeks to provide for a residence-based tax system where under the taxable income of a taxpayer resident in Zimbabwe is the taxpayers income from all geographical sources, less any deductions allowed by this Bill,” the Bill reads in part.
Under the Bill, an individual shall be regarded as resident in Zimbabwe if he/she has a normal place of abode and is present in the country at any time during the year of assessment or is present in Zimbabwe for one or more periods amounting to 183 days more in any 12-month period.
It also seeks to abolish the special court of income tax appeals while retaining the Fiscal Appeal Court that would become the appellate court of first instance for income tax appeals.
The Bill proposes a penalty for failure to pay petroleum importers levy timeously.
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It also seeks to empower the board of the Zimbabwe Revenue Authority to make regulations, which in the board’s opinion, would be necessary to give effect to the Act, but will require the approval of the Finance minister.
Other proposed changes relate to the updating and modernisation of outdated terms to take into account developments in the field of income taxation such as the changeover to the accrual basis of accounting.