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PAYE GUIDE FOR EMPLOYERS

ZIMBABWE
A GUIDE TO ZIMBABWE TAXATION

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WHAT IS PAYE
REMUNERATION
EMPLOYERS
EMPLOYEES
PAYE FRAMEWORK
OTHER PAYROLL TAXES
RETURNS & IMPORTANT DATES
PENALTIES FOR NOT COMPLYING

A GUIDE TO ZIMBABWE TAXATION

1. WHAT IS PAYE?
PAYE is tax levied on remuneration paid to an employee by an
employer.
PAYE stands for Pay As You Earn, that is to say the tax is paid as
and when an employee earns his or her income.
Under the PAYE system, all employers administer the collection of
employee tax, but at the end of the tax year, the tax department
would assess the same PAYE to account for income tax variance.

A GUIDE TO ZIMBABWE TAXATION

2. REMUNERATION
o Remuneration refers to compensation in any form paid to person for
services rendered in the capacity of an employee.
o Remuneration is constituted of the following:

Salary,
Leave pay,
Allowance,
Wages,
Overtime pay,
Bonus,
Gratuity,
Commission,
Fees,
Emolument,
Pension,
Retiring allowance,
Stipend or commutation of a pension or an Annuity paid for services rendered.

A GUIDE TO ZIMBABWE TAXATION

3. EMPLOYERS

Any person who pays or is liable to pay to any employee any


amount by way of remuneration in terms Section 73 of the
Income Tax Act [Chapter 23:06] as read with the Thirteenth
Schedule to the same Act.
An employer also includes the following representatives:
In the case of a company, the public officer in the case of
an association of persons, a member of the associations
appointed by its governing board
In the case of a local authority, an officer appointed by the
local authority
In the case of a person under legal disability, the trustee
In the case of an employer who is not ordinarily resident
in Zimbabwe, an agent of such employer
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DUTIES OF EMPLOYERS
1. TO REGISTER WITH ZIMRA
Every person who becomes an employer shall apply to the
Commissioner-General of the Zimbabwe Revenue Authority
(ZIMRA) for registration as an employer within 14 days of his/her
becoming an employer.
A non-resident employer shall appoint a resident representative
to secure registration on his behalf and notify the CommissionerGeneral of ZIMRA of that appointment in writing.

Where a registered employer changes his/her address or ceases


to be an employer, he or she is required to notify the
Commissioner-General of ZIMRA of those changes within 14
days

A GUIDE TO ZIMBABWE TAXATION

DUTIES OF EMPLOYERS
2. EMPLOYERS TO WITHHOLD TAX & REMIT TO ZIMRA
Every employer, whether or not he/she has registered as an employer who
becomes liable to pay remuneration to an employee, shall be required to
withhold employees tax according to the tax tables which are available on
the ZIMRA website.
The registered employer is required to remit employees tax withheld to
ZIMRA by the 10th of the following month.

A GUIDE TO ZIMBABWE TAXATION

DUTIES OF EMPLOYERS
3. EMPLOYERS TO KEEP RECORDS AND FURNISH RETURNS
Every employer shall maintain a record for each employee showing:
personal details of the employee
the amounts of remuneration paid/payable to each employee
the amount of employees tax withheld and Form P2 available on ZIMRA
website

Every employer is required to submit an ITF16 not later than 30 days


after the end of the year of assessment.
# It should be noted that all these records must be retained for a
period of at least six years
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DUTIES OF EMPLOYERS
4. EMPLOYERS TO ISSUE EMPLOYEES TAX CERTIFICATES
(P6) FORMS
An employer is required to issue employees with employees tax
certificates:
At any other time specified by the Commissioner-Commissioner of
ZIMRA after verification of the ITF16
Within 30 days of an employee having left employment
Within 14 days of ceasing to be an employer

A GUIDE TO ZIMBABWE TAXATION

4. EMPLOYEES
Means an individual to whom remuneration is paid or payable
at an annual rate that is more than the tax free threshold, i.e.
more than US$300 per month.
But excludes:
A non-executive director
An independent contractor or consultant

A GUIDE TO ZIMBABWE TAXATION

EMPLOYEES
DECEASED EMPLOYEES

Following the death of an employee, the employer is required to


issue a form P6 within 30 days of the date of payment to the
executor. The executor is required to submit a tax return to
ZIMRA.
CASUAL OR TEMPORARY EMPLOYEES
Where casual labour is employed PAYE must be deducted in
accordance with the PAYE tables.
It is impossible to average or forecast these for the year.
However, PAYE has to be deducted per daily, weekly or monthly
table, depending on the payment period.

A GUIDE TO ZIMBABWE TAXATION

EMPLOYEES
NEW EMPLOYEES

Remuneration for new employees who start work during the


year are subject to PAYE in the normal way using the PAYE
tables.
The employee is required to submit a tax return at the end of
the year ITF1 /(P6 form).
EMPLOYEES WHO CHANGE EMPLOYMENT
When an employee leaves the service of the employer the
latter is obliged to furnish the employee with a form P6 within
30 days of the employee leaving the employ.
The employee is required to submit a tax return at the end of
the year
A GUIDE TO ZIMBABWE TAXATION

PAYE FRAMEWORK
CALCULATION OF PAYE
Gross income
Less: exempt income (Sect 14 a.r.w 3rd Sch Income Tax Act)
Income
Less: Allowable deductions (Sect 15 of Income Tax Act)
Taxable income
Apply tax rates @ sliding scales
Gross tax (calculated using tax tables)
Less: Credits
Add: 3% Aids levy
Less: PAYE withheld during the year
Tax payable / (refundable)
A GUIDE TO ZIMBABWE TAXATION

xxx
(xxx)
xxx
(xxx)
xxx
xxx
(xxx)
xxx
xxx
(xxx)
xxx

PAYE FRAMEWORK
GROSS INCOME
Gross income is constituted of remuneration as discussed above
and also includes benefits paid to an employee.

Benefit are amount paid in cash or kind to an employee by


employer or amounts received by an employee as a result of his
employment over and above his or her salary.
Benefits are generally valued in relation to the cost to the
employer of providing such benefit to the employee. Examples
of benefits include housing, motoring, school fees etc
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GROSS INCOME
Salary advances
Advances against salary, bonus, commission etc. are
remuneration and PAYE must be deducted in the month in
which they are paid.
Salary arrears
Arrears of salary, wages etc. becomes taxable on the date
on which the decision to pay the arrears is made.

A GUIDE TO ZIMBABWE TAXATION

TAXATION OF BENEFITS

All benefits which accrue to an employee, with the


exception of medical aid and medical expenses paid on
behalf of the employee by the Employer, are taxable.

Benefits are generally valued in relation to the cost to the


employer of providing such benefit to the employee
except for housing benefits and furniture benefit which
are valued in relation to the value to an employee.

A GUIDE TO ZIMBABWE TAXATION

TAXATION OF BENEFITS
Motoring benefit
Where an employee is given free use of a vehicle by his employer, the
benefit it taxable the deemed benefit is in relation to the engine
capacity.
Where the car is used for less than a year the benefit is apportioned on
time basis.
Deemed costs to the employer per annum
Engine Capacity
Deemed cost($)
Less than 1500 cc
3600
1500 -2000 cc
4800
2000 3000 cc
7200
3000 cc and above
9600

A GUIDE TO ZIMBABWE TAXATION

TAXATION OF BENEFITS
Housing benefit
Where an employer is provided with a house by his employer,
the benefit is taxable. The benefit is valued accordance to
market rentals for a house within a municipal area.

Where such house is outside municipal area the benefit is


calculated as 7% of cost of construction or 12.5% of employees
salary.
Furniture benefit
Where an employee is given a house that is fully furnished, a
furniture benefit arises and is taxable.
The benefit is valued as 8% of the cost of furniture.
A GUIDE TO ZIMBABWE TAXATION

TAXATION OF BENEFITS
Loan Benefit
Low or interest free loans to employees exceeding $100
other than loans for educational or technical training or
medical expenses for the employee, spouse or children are
taxable.
Low interest loans means loans whose interest rate is less
than LIBOR plus 5%. LIBOR stands for London Interbank
Offered Rate. Libor rates are found on ZIMRA website.

A GUIDE TO ZIMBABWE TAXATION

TAXATION OF BENEFITS
Disposal or Sale of Motor Vehicle to an Employee at Less
Than Market Value

The disposal or sale of a motor vehicle to an employee at


less than market value during or on termination of
employment gives rise to a benefit, subject to PAYE.
Taxable amount is (Market Value Selling Price)
No benefit arise where the employee was 55 years or older
at the beginning of the year of assessment.
A GUIDE TO ZIMBABWE TAXATION

TAXATION OF BENEFITS
Retrenchment Benefits
A Severance Pay or Retrenchment Package is a payment
made to the Employee by the Employer on the agreed
premature termination of a contract of employment,
normally as a result of restructuring or workforce
streamlining due to operational hardships or reorganisation.
One third of the package is exempt subject to a minimum
exemption of $10 000 & maximum exemption of $20 000

A GUIDE TO ZIMBABWE TAXATION

TAXATION OF BENEFITS
Retrenchment Benefits
Retrenchment package excludes Pension or Cash In Lieu
of Leave.
The retrenchment scheme must be approved by the
Minister of Labour for it to qualify for an exemption.
A tax deduction directive must be applied for by the
Employer to Zimra.

A GUIDE TO ZIMBABWE TAXATION

TAXATION OF BENEFITS
Application of a Tax Deduction Directive
On termination of employment an employer determines the
respective retrenchment package and applies to ZIMRA for a tax
deduction directive in form NP4.

A GUIDE TO ZIMBABWE TAXATION

TAXATION OF BENEFITS
Application of a Tax Deduction Directive

The following information, in respect of the employee


receiving the retrenchment package, should be carefully and
accurately filled by the employer onto the application form:
First name and surname
National identity number (which acts as the taxpayer identification number,
TIN)
Tax year (the period in which the retrenchment accrued or is paid)
Nature of benefit
Amount of benefit (based on the open market value of the benefit or
property offered as retrenchment)
Salary and allowance per annum

A GUIDE TO ZIMBABWE TAXATION

TAXATION OF BENEFITS
Application of a Tax Deduction Directive
The application form should be signed by both the
employer or his representative and the employee. Where
the employee is unable to sign the application form, the
employer should indicate this to ZIMRA and may sign on
behalf of the employee. The completed application form
should then be submitted to ZIMRA for processing.
On receipt of the application from the employer, ZIMRA
will check the correctness and accuracy of the
information on the form and its accompanying
attachments before issuing the directive
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TAXATION OF BENEFITS

Other benefits
The provision of domestic workers including gardeners.
The provision of security services
The provision of clothing with the exception of protective
clothing
Fuel Coupons- Taxable in the hands of employees if given to
employees who are not enjoying a taxable motoring benefit.
School fees benefit- where the employer pays school fees for
the employees children, the cost of the fees payable becomes
taxable in the hands of the employee.

A GUIDE TO ZIMBABWE TAXATION

EXEMPTIONS
Bonus or any performance related award, in respect of
the first US $1000.
Retrenchment package, in respect of a third of such
package to a minimum of US$10 000 and a maximum of
US $20 000. (i.e. the ceiling of retrenchment package is
US $60 000)
The value of medical treatment or of travelling to obtain
such treatment which is provided by an employer for an
employee or the dependant of an employee, whether
provided in kind, by direct payment, by refund or in any
other manner whatsoever.
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EXEMPTIONS
An amount accruing by way of a benefit in respect of the
injury, sickness or death of a person which is paid to the
person or his dependants or deceased estate; or from a
benefit fund; or in terms of a policy of insurance covering
accident, sickness or death; or by a medical aid society.
The amount of any contributions paid to a medical aid
society by an employer on behalf of his employee.
A pension received by an elderly person from the
Consolidated Revenue Fund or any approved pension
fund.
The benefit of a motor vehicle sold to an elderly
employee by his or her employer.
#Note A person is considered elderly if he or she have turned
55 years prior to 1 January of the tax year concerned.
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EXEMPTIONS
Any amount received by way of an entertainment
allowance to the extent that it is expended on the
business of the employer.

A scholarship paid to a student, as long as it is not


payment for services rendered.
Compensation for injury at work paid by an
employer

A GUIDE TO ZIMBABWE TAXATION

ALLOWABLE DEDUCTIONS
These are expenses suffered by an employee
which the Commissioner would allow to
reduce a taxpayers taxable income.
To be allowed as deductions are membership
subscriptions to trade, business or
professional associations and pension
contributions.

A GUIDE TO ZIMBABWE TAXATION

ALLOWABLE DEDUCTIONS
Subscriptions
Subscriptions to trade, business and
professional associations are allowed.
Examples are subscriptions to CIS, ACCA etc.
Subscriptions by students are however not
allowed.

A GUIDE TO ZIMBABWE TAXATION

ALLOWABLE DEDUCTIONS
Pensions contributions
Contribution to a Pension Fund max $5400
Contribution to a Retirement Annuity Fund- max $2700
Private sector- Contribution to NSSA is 3.5% of gross salary to
maximum of $700 per month. Maximum contribution is $24.5 per
month.
Arrears pension contribution maximum allowable contribution is 8%
of the persons annual salary or $1800, whichever is greater.
The aggregate maximum for all pension contribution is $5400 p.a.

A GUIDE TO ZIMBABWE TAXATION

CREDITS
Any individual earning income from employment, trade or
investments which is taxable can claim tax credits which may
reduce their chargeable tax.
Credits are designed for specific categories of taxpayer to
address special social welfare needs such as expenses towards
improvement or maintenance of health and/or the control of
permanent physical, mental and visual disability.
Categories of credits are as follows:

Blind person
Elderly person
Disability credit
Medical expenses
Contribution to a Medical Aid
A GUIDE TO ZIMBABWE TAXATION

CREDITS
Blind persons credit
The credit for this category is US$900.00 per annum spread over 12 months.
To qualify, the person claiming the credit must have medical proof supplied by a
specialist medical practitioner, specifying the degree of his blindness.

The taxpayer or his/her employer should then apply for a directive at the nearest
ZIMRA office for consideration.
Any portion of the deductible credit which is not applied to reduce the chargeable tax
for a married person can also be allowed as a deduction from the chargeable tax
which his or her spouse is chargeable. This means that spouses can benefit from each
others concessions.
In that case, both spouses should complete and submit separate returns for the
relevant tax year so that the transfer of the credit can be facilitated, each person
claiming the portion not claimed by the other.
A GUIDE TO ZIMBABWE TAXATION

CREDITS
Elderly Person`s Credit
The credit for this category is US$900.00 per annum
spread over 12 months
To qualify, the person claiming the credit must be aged 55
years or above prior to the commencement of the period of
assessment. Where the assessment period is less than 12
months, the amount (credit) shall be reduced
proportionately.
The tax return should be accompanied by proof of the
taxpayers age in the form of a birth certificate or national
identification card showing the date of birth.
A GUIDE TO ZIMBABWE TAXATION

CREDITS
Mentally or Physically Disabled Persons Credit
The credit for this category is US$900.00 per annum spread over 12 months
To qualify, the person claiming the credit must have medical proof supplied by a specialist medical
practitioner, of permanent substantial disability (which excludes blindness, for which a separate credit
is available). Temporary disability such as is caused by injury due to an accident or illness for which
rehabilitation or cure can reverse the condition does not qualify as disability for purposes of the credit.

Mentally disabled persons who cannot personally attend to the requirements stated above can be
assisted by a representative and in the case of applications by their employer.
Any portion of the deductible credit which is not applied to reduce the chargeable tax for a married
person can also be allowed as a deduction from the chargeable tax which his or her spouse is
chargeable. This means that spouses can benefit from each others concessions.

In that case, both spouses should complete and submit separate returns for the relevant tax year so
that the transfer of the credit can be facilitated, each person claiming the portion not claimed by the
other.
To claim the disability credit, the taxpayer must have been ordinarily resident in Zimbabwe in
the period of assessment

A GUIDE TO ZIMBABWE TAXATION

CREDITS
Medical expenses

The credit for this category is a total of 50% for medical expenses'' paid for.
These should be expenses incurred by the taxpayer and paid by him for services rendered to
him/her, his/her spouse and minor children, including legally adopted minor children and cannot
be extended to anyone else. A credit will not be allowed to the extent that the taxpayer is entitled
to a refund or payment from any source whatsoever in connection with the expense (for example
a credit is not allowed where a refund is awarded by a medical aid society).
These medical expenses include expenses paid for the following:
Services rendered by a medical or dental practitioner
Drugs and medicines supplied on the prescription of a medical or dental practitioner
Accommodation on admission, maintenance, nursing and treatment, including blood transfusions,
X-ray and laboratory examinations and medical tests in a hospital, maternity-home, nursinghome, sanatorium, surgery, clinic or similar institution
Transportation by ambulance, including an air ambulance
Medical aid contributions to a medical aid society in respect of the taxpayer or his/her spouse or
any minor children.
Expenses incurred in purchasing an invalid appliance.

In submitting a tax return, the taxpayer should attach evidence of the expenses claimed in their
original forms.

To claim the medical expenses credit, the taxpayer must have been ordinarily resident in
Zimbabwe in the period of assessment.
A GUIDE TO ZIMBABWE TAXATION

CREDITS
Credit for the Cost of Purchasing Invalid Appliances
The credit for this category is 50% of the total cost of the appliance used by
the taxpayer, his/her spouse or any of his/her children including legally
adopted children in respect of any of the following appliances:
a wheelchair ,
any artificial limb, leg callipers or crutch ; or
any special fitting for the modification or adaptation of a motor vehicle,
bed, bathroom or toilet to enable its use by a person suffering from a
physical defect or disability; or spectacles or contact lenses
The taxpayer should complete a return and attach evidence of such purchase
and proof of the cost thereof.
#Please note that this credit is open to residents of Zimbabwe only.

A GUIDE TO ZIMBABWE TAXATION

OTHER PAYROLL TAXES

Zimdef
Standard Development Levy
Manpower development Levy
National Employment Council (NEC)

A GUIDE TO ZIMBABWE TAXATION

ZIMDEF
ZIMDEF contributions are employer contributions
only, based on cost to the employer of the
employment of staff. The payment is based on 1%
of the total wage bill inclusive of allowances,
bonuses, benefits, employer contribution on behalf
of employees to NSSA, Medical Aid, NEC and
Pension.
Zimdef contributions are governed by the Manpower
Planning and Development Act Chapter (28:02).
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ZIMDEF
NEC ZIMDEF contributions are raised primarily
to sponsor the training of artisans through the
apprenticeship and other schemes.
ZIMDEF contributions are payable by the 15th
day of the subsequent month. Late payments
will incur penalty interest.

A GUIDE TO ZIMBABWE TAXATION

STANDARDS DEVELOPMENT LEVY


Standards Development Levy contributions are
calculated in the same way as ZIMDEF except that the
value of company contributions of pension, NEC,
medical aid on behalf of employees is excluded.
It is levied at a rate of 0.5% of gross wage bill.
The authority for charging this levy on employers stems
from the STANDARDS DEVELOPMENT FUND ACT,
Chapter 14:19
Section 8 of that statute provides that the objects for
which the Fund is established shall be the development
and promotion of standardization and quality control of
commodities and services.
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NATIONAL EMPLOYMENT COUNCIL


(NEC)
This deduction is levied on employees whose employer is a
member of a regulating board in the industry of the employer.

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RETURNS
P2 Form- return for the remittance of PAYE
(due by the 10th day of the month following
the month of deduction)
ITF 16 form- return for employee payroll
details (due within 30 days after the end of
the year of assessment)
P6 form(Tax certificate)

A GUIDE TO ZIMBABWE TAXATION

P6 FORMS
Every employer shall furnish an employee wit a tax
certificate at the end of every year for assessment,
unless the employer is on Final Deduction System
(FDS).

The employer is required to issue Forms P6 as


follows: within 30 days from the end of the relevant year for
all employees in service or
within 30 days of terminating employment services
for those employees who have left service in the
respective tax year or
at any other time specified by the Commissioner.
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P6 FORMS
Employers who are on FDS should furnish tax
certificates only to the following categories of
employees.
Terminated employment during the year of assessment.
Changed employment during the year.
Worked part-time at the same time being fully employed by
another employer.
Started employment during the course of the year.
Received pension.
Received income which is not subject to PAYE.
Are executors of deceased estates
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P6 FORMS

The Form P6 shall contain the following information;

Name and Address of Employer


Business Partner Number
Tax Year
Serial Number
Details of the Employee
Total Remuneration Earned
Deductions and Credits
Amounts of Employees Tax Withheld

A form P6 is used to verify whether PAYE was correctly


calculated taking into account all earnings, benefits,
allowances and credits due to the employer.
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ITF 16
ITF 16 is a return for payroll details. Every employer
should remit the return within 30 days after the end of
the year of assessment.

The following forms part of the additional information


required:
Schedule of monthly PAYE remittances.
Schedule for motor vehicles used for private business
Schedule of loans disbursed to employees, and respective
interest rates charged, if any.
Receipts for medical expenses, if any, taken into account in
granting medical credits
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P2 FORM
Is a return for the remittance of PAYE. It is a form that
accompanies the actual payment to ZIMRA. PAYE is due
on or before the 10th day of the month following the
month of collection. An employer is expected to complete
a P2 form, attach deposit slips and submit the returns to
ZIMRA.
Note that, even if you deposit the amount of PAYE in
ZIMRA account before the due date, but fails to remit the
P2 form in time, you may be penalised.

A GUIDE TO ZIMBABWE TAXATION

PENALTIES
Late payment of PAYE attract a penalty of 100% of
tax liability. The employer is liable for both the tax
liability & penalty.
Interest is charged at a rate of 10% from the due
date to the date immediately before the date of
payment.
Late remittance of returns attracts a civil penalty
of $30 for each day the return remains
outstanding.
A GUIDE TO ZIMBABWE TAXATION

TAX TABLES

2015 Annual tax tables


INCOME BAND $

TAXABLE
INCOME $

TAX RATE %

3 600

3 600

3 600-

18 000

14 400

20

18 001 36 000

18 000

25

36 001 60 000

24 000

30

60 001 120 000

60 000

35

120 001 180 000

60 000

40

180 001 - 240 000

60 000

45

240 000 - Above

50

A GUIDE TO ZIMBABWE TAXATION

TAX TABLES

Monthly, fortnightly and weekly tax tables can be


obtained at ZIMRA website.

A GUIDE TO ZIMBABWE TAXATION

REFERENCES
Income Tax Act, Chapter 23:06
Finance Act, Chapter 23:04
www.zimra.co.zw

A GUIDE TO ZIMBABWE TAXATION

TILL NEXT TIME


P NYATANGA (Author: A Guide to Zimbabwe
Taxation)
Email: taxguidezim@gmail.com
Facebook:
http://www.facebook.com/aguidetozimbabwe
taxation
Cell +263 77 3625 247

A GUIDE TO ZIMBABWE TAXATION