THE recent tax pronouncements by the Zimbabwe Revenue Authority (Zimra), though always part of our tax code, shall create a scenario of tax blood on the creative industry dance-floor.
Most shall be left with nothing.
Some of the tax quagmire they are to face is self-inflicted.
The flex to brag about one’s earnings may bring carnage to the entire industry as in this case.
Imagine giving the tax authority, Zimra, such earnings information just to brag to fellow creatives and often industry rivals.
It’s an unusual way of self-incrimination.
The Zimra notice requests creatives to regularise their tax affairs.
It means registering as a taxpayer including but not limited to tax heads such as pay as you earn, value-added tax (Vat), Aids levy and withholding tax.
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No sector is tax exempt when it’s conducting trade and, in this instance, mostly entertainment.
Any income deemed to be from Zimbabwe is subject to tax.
They may be left with nothing as the tax authority may look back for six years when they are investigating or conducting an audit.
It is blood on the dance-floor because it may wipe out all earnings ever made by a content creator.
According to their own bragging, they face 40% income tax because their tax bracket is mostly the highest of sole proprietors or individual.
They must, in addition, pay 3% Aids levy for their team or workers and 15,5% for Vat.
If this is projected for six years past, it’s not easy money.
There is no saving culture in this country and even if that money was made, it was probably chewed in jet set lifestyle’s.
On these tax calculations, the real tragedy is that the authority applies a penalty, normally a minimum of 20% for those who make voluntary disclosures and there is a 10% interest per month.
This interest accumulates or self-calculates on a daily basis.
These two are really hot ambers because interest may run for six years during a creatives trade.
The real pain comes from the fact that interest cannot be subject to an appeal or objection depending on whether its from income tax or Vat.
It is covered by Statutory Instrument 26 of 2025 read with section 39 of the Vat Act such that the commissioner-general’s hands are tied to even have a discretion on interest issues.
To add salt to injury, the interest is not only compound, but in duplum rule doesn’t apply.
There are very few circumstances where penalty has been approved by the tax authority that is less than 20%.
Calculate all these percentages and one is likely to go beyond 150% of earnings in United States dollars in all the years of creative career.
A lot of creatives may try to play hide and seek with the tax authority.
That will face even more severe consequences.
Evasion by either being an unregistered tax payer and/or failure to self-disclose tax affairs often result in 150% penalty and the same 10% interest per month.
Not so many can survive such a hurricane, especially with the authorities’ power for asset forfeiture, bank garnish orders and direct collection from one’s debtors.
There is an additional challenge, which is the worst of all scenarios.
It is when one cannot provide proof of income of yesteryear.
One ordinarily earns fewer dollars in early years of career.
If they are not able to show the lower incomes, the tax authority will use the current higher income backdating to six years.
A really big knock on one’s wealth.
Zimra has power for asset forfeiture, collection of your dues from third parties and garnish on bank accounts.
They can pierce the veil on trusts and companies associated with a creative.
There is little place to hide undeclared tax.
Acting Commissioner-General, Misheck Govha, is doing it the tough way of the Germans.
There is this narrative that the income is banked in foreign accounts because some platforms are not monetised in Zimbabwe, so the tax is not for Zimbabwe and so they are tax exempt.
It may be a wrong interpretation of the law.
Zimbabwe uses a source-based tax code.
If the content is local and created in Zimbabwe, it is subject to tax here in Zimbabwe.
It matters not that the proceeds of work done in Zimbabwe is deposited in a bank elsewhere.
Without a double tax agreement with the country where proceeds are deposited, the tax is paid in Zimbabwe.
The double tax agreements relief to creatives are a huge challenge because the creatives are local.
Local means staying and/or working in Zimbabwe for 180 days in a year. Most of them are local residents.
A further challenge is that section 12A of the Income Tax Act has far- reaching consequences of deemed income of some foreign transactions, including but not limited to digital creations.
Fortunately, the several cars and cash they receive from benefactors like Wicknell Chivayo, Zanu PF, Gsix and so forth is not subject to tax.
It is fortuitous gratuity.
However, wording in giving and timing of that giving in my opinion matters.
If the wording is such it is a reward for work, it may be defined as income as it is money paid in discharge of entertainment.
I also think that if it is given immediately before a performance or soon after a brilliant performance, it is also income for discharge of one’s work.
A lot of creatives earn value like products from companies they advertise for.
The value received is taxable too on valuation equivalent to an open commercial trade.
The real deal is compliance and showing less income than their calculations, provision of expenses to knock off profit, re-think business model, change business from sole proprietorship to other forms and maintaining books of accounts.
The other alternative is to lobby the Finance ministry to deliver a statutory instrument, but this, however, requires extensive research, close co-operation, knocking correct doors and good writings.
It’s a long and very cold season facing “taxpayers”.
