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Zimbabwe budget summary 2008
KPMG
November 30, 2007

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An overview of the 2008 budget

KPMG is pleased to present our commentary and report on the 2008 Budget.

• With effect from 1 January 2008, the threshold for the highest rate of tax has been increased to $500 million per month. Once again, some effort has been made to alleviate the tax burden arising from income tax from employment income for employees in the lowest tax bracket. The non-taxable threshold is now $30 million per month.
• For the elderly, rental income and investment income will be tax free up to a maximum of $250 million per month.
• The tax free bonus quantum has been increased to $75 million per annum with effect from 1 November 2007.
• The profit arrived at, after adjusting for inflation, from the disposal of shares obtained by employees under a share option scheme will be subject to income tax with effect from 1 January 2008.
• The Reserve Bank of Zimbabwe 'special interest' associated with the surrender of foreign currency with be exempt from withholding tax with effect from 1 October 2007.
• With effect from 3 December 2007, the valuation of imported goods for duty purposes will be based on the effective rate of exchange of the Reserve Bank of Zimbabwe.
• Tax allowances for motor vehicles and staff housing are now based on 50% of the actual cost subject to a maximum of $100 billion. In addition, the special initial allowance on all qualifying assets has been increased from 50% to 100% with effect from 1 January 2008.
• The VAT registration threshold will increase to $120 billion with effect from 1 January 2008.
• The remittance period for capital gains withholding tax has been reduced to thirty days from the date of the receipt of payment.
• The 10% withholding tax on tenders and contracts is now applicable to contracts of $500 million or higher. We await clarification of this significant increase as prescribed in the Finance Bill on promulgation.

We trust that you will find the tax report useful. Should you have any queries or desire additional information, please contact your partner at KPMG, or our Tax Director and his team.

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