|AUGUST 2022 – ZIMBABWE
MID-TERM BUDGET SPEECH & THE FINANCE BILL, 2022
It is important that employers note the following:
Finance Bill, 2022 finalised to incorporate tax changes with effect 1 August 2022
Following the mid-term budget speech of 28 July 2022, the Finance Bill, 2022 was finalised and gazetted on 26 August 2022.
This Finance Bill, 2022 will amend the Finance Act [Chapter 23:04], the Income Tax Act [Chapter 23:06], the Value Added Tax Act [Chapter 23:12], the Capital Gains Tax Act [Chapter 23:11], the Customs and Excise Act [Chapter 23:02] and the Revenue Authority Act [Chapter 23:11].
These amendments will give effect to certain fiscal measures mentioned by the Minister of Finance and Economic Development in the budget speech.
Employers should note that these changes have not yet been enacted and should be deployed at their own discretion.
Individual taxation highlights
• Effective from 1 August 2022, the monthly PAYE tax-free threshold for employees has increased to ZWL$ 50,000.00.
• The tax bands have also been adjusted to end at ZW$ 12,000,000.00 per annum. The 40% marginal rate will be applicable to income above ZWL$ 1,000,000.00 per month.
• The new thresholds and rates, as set out below, are applicable from 1 August to 31 December 2022.
• The local currency bonus tax-free threshold has been increased from ZWL$ 100,000 to ZWL$ 500,000, with effect from 1 November 2022.
• The foreign currency threshold remains the same at US$700.
• No changes were made to the US$ tax tables.
· A new criminal offence will be introduced for businesses failing to remit VAT.
· The rules restricting the payment of value-added tax in foreign currency will be relaxed, but stricter rules will apply to value-added tax refund requests.
· With effect from 1 August 2022, the Commissioner no longer has discretionary powers to accept a VAT claim backdated as far back as three years.
· The VAT registration threshold is to be lowered to the national currency equivalent of US$ 40,000, down from US$ 60,000, with effect from 1 September 2022.
· The budget announced changes to the exempt thresholds under the Intermediated Money Transfer Tax, which applies to money transfers. With effect from 1 August 2022, the following changes were made:
· The tax-exempt threshold for transactions was raised to ZW$ 2,500 from ZW$ 1,000;
· The maximum tax payable per transaction was raised from the current ZW$ 1.32m to ZW$ 3,3m, on transactions with values exceeding ZW$ 165m; and
· In the case of foreign currency denominated transfers, the maximum tax payable per transaction was raised from US$ 10,000 to US$ 20,000, on transactions with values exceeding US$ 500,000.
· Government will increase the oversight of special economic zone tax breaks, to ensure that only companies that export all of their goods and services are entitled to the specified tax incentives. Further, the Government has said that it will remove tax incentives for companies seen to not be passing on those benefits to consumers.
To view the mid-term budget speech, follow the link.
To view the Finance Bill, 2022, follow the link.