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Bill, 2005 [H.B.26, 2004]
(No. 2) Act, 2005 (Act 8/2005)
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Bill will amend the Finance Act [Chapter 23:04], the
Income Tax Act [Chapter 23:06], the Value Added Tax
Act [Chapter 23:12], the Customs and Excise Act
[Chapter 23:02] and the Revenue Authority Act [Chapter
13:14]. These amendments will give effect to certain
fiscal measures mentioned by the Minister of Finance in his mid-term fiscal
policy review statement delivered on the 4th August, 2005, and make certain
modifications to improve revenue collection and administration. In more
detail, the individual clauses of the Bill provide as follows:
sets out the Bill's short title.
14 of the Finance Act prescribes the rates of income tax payable by various
classes of taxpayers.
clause will alter the income ''bands'' according to which rates of income
tax are calculated by deleting the lowest existing band. The effect of
this is to alter the minimum level of income that will attract income
tax. At present this minimum is $12 000 000 a year, and this clause will
increase that amount to $18 000 000.
amends section 22A of the Finance Act, which fixes the rate of the tobacco
levy - which at present is payable by both sellers and buyers of tobacco.
The effect of the amendment is to relieve tobacco sellers from liability
for the levy.
will replace section 22C of the Finance Act, which at present fixes the
rate of tax imposed on informal traders by the Twenty-Sixth Schedule to
the Income Tax Act. This tax will be replaced by a more general tax on
the basis of the presumed income (commonly known as a ''presumptive tax'')
of such of those persons engaging in any of the undertakings specified
in the Twenty-Sixth Schedule as did not furnish a return under section
37 of the Income Tax Act in any year of assessment prior to the Finance
Act, 2005 (see clause 8). The classes of persons upon whom it is proposed
to charge the presumptive tax are (in addition to informal traders) small-scale
miners and operators of taxicabs and omnibuses.
will amend the Schedule to Chapter I of the Finance Act, which sets out
the rates of income tax. The effect of the amendment is excise the lowest
existing band of taxable income in conformity with the amendment referred
to under clause 2.
will amend section 2(1) of the Income Tax Act, which includes definitions
of words and phrases used throughout the Act. The purpose of the amendment
is to insert a definition of the phrase ''tax clearance certificate'',
which is a document that will be required for certain purposes of the
Income Tax as amended by clauses 7, 9, 10 and 16 below. The definition
of ''year of assessment'' will also be amended to accommodate the excision
of the lowest band of taxable income with effect from the 1st September,
section 36C which this clause will substitute in the Income Tax Act, when
read with the new Twenty-Sixth Schedule substituted by clause 16, will
create a new presumptive tax to replace the informal traders tax. Persons
who, before this Bill becomes an Act, furnished a return under section
37 of the Income Tax Act, will not be liable to pay the new tax or, if
they pay it, must continue to furnish returns under section 37 of the
Income Tax Act. For details of the tax, see clauses 4 above and 16 below.
amends section 61 of the Income Tax Act (which deals with the appointment
by companies of officers for tax accounting purposes) in two respects.
Firstly, it will extend the provisions of this section to private business
corporations. Secondly, it will update the penalty for non-compliance
with this section to an amount not exceeding the maximum amount for a
level five fine (presently $100 000).
will amend section 80 of the Income Tax Act, which makes special provision
for persons (''payees'') who enter into contracts with the Government,
statutory bodies, quasi-Governmental institutions or taxpayers who are
registered as such in the records of the Commissioner General, and who
have not submitted income tax returns for the most recent year of assessment.
The paying officer of the Government or the statutory body, quasi-Governmental
institution or taxpayer concerned is presently obliged to withhold 10%
of all payments due to the payees under the contracts and pay the withheld
amounts to the Commissioner-General. These amounts are then set off against
the income tax due by the payees when their tax liability is finally assessed.
scope of this section needs clarifying in order to facilitate its administration.
Accordingly, contracts of employment and contracts for the sale or supply
of goods and services entered into in the normal course of trade (such
as purchases and sales at shops) are excluded from its scope. Other provisions
inserted by this clause in section 80 stipulate, firstly, that a paying
officer will not be required to withhold any part of a contract payment
if the payee produces a valid tax clearance certificate issued by or on
behalf of the Commissioner-General, and, secondly, that any statutory
body, quasi-Governmental institution or registered taxpayer failing to
withhold or to pay to the Commissioner any amount required to be withheld
from a payee in terms of section 80 will be liable for the payment of
that amount, plus a penalty of an amount equal to the outstanding amount
if the failure was wilful.
(No. 2) Act, 2004, inserted a new section in the Income Tax Act requiring
hauliers and tax operators to produce to the Commissioner of Road Transport
a tax clearance certificate from the Commissioner-General before they
can be licensed to operate under the Road Motor Transportation Act. The
effect of this amendment is to replace that section by a more comprehensive
provision that makes licensing under the Road Motor Transportation Act,
the Mines and Minerals Act [Chapter 21:05], the Shop Licences Act
and the Tourism Act conditional upon the production of a valid tax clearance
certificate. In addition, persons registering new companies and private
business corporations will, as a condition of their incorporation, be
required to submit to the Registrar of Companies tax clearance certificates
relating to the appointment of public officers of the new entities in
accordance with section 61 of the Income Tax Act.
by other clauses of this Bill of specific provisions in the Finance and
Income Tax Acts relating to the presumptive tax means that no provisions
relating to that tax need to be enacted by way of regulations. Accordingly,
this clause repeals a provision to that effect in section 90 of the Income
Tax Act. It also empowers the Minister responsible for finance to impose
civil monetary penalties as well as criminal monetary penalties (fines)
for breaches of regulations made under section 90 of the Income Tax Act.
will provide for a credit against income tax for persons who have paid
presumptive tax in terms of the new Twenty-Sixth Schedule to the Income
Tax Act (as to which, see clause 16).
(No. 2) Act, 2004, inserted a new subparagraph in paragraph 4 of the Third
Schedule to Income Tax Act exempting from tax amounts of up to $24 000
000 accruing to persons aged 59 years and above by way of rental income
or interest from discounted securities. This clause splits the new subparagraph
between paragraphs 4 and 10 of the Third Schedule because exempted interest
income is more appropriately dealt with under paragraph 10.
Financial Laws Amendment Act, 2004, exempted from tax interest on any
deposit with a financial institution. The effect of this amendment is
to restrict that exemption to deposit holders of or above the age of 59,
up to a limit of the first $24 000 000 accruing to the taxpayer. The opportunity
is also taken to correct the lettering of certain existing subparagraphs
in paragraph 10(1) of the Third Schedule.
will amend the Thirteenth Schedule (''Employees' Tax'') of the Income
Tax Act, in three respects. Firstly, it makes appropriate amendments in
connection with the taxation of income from employment that is earned
in the form of convertible currency (as to which see clause 2 above).
Secondly, it excludes from the scope of that Schedule the payment of remuneration
to persons in domestic employment, as long as such remuneration does not
exceed the sum of the monthly minimum wage fixed for those persons by
Statutory Instrument 377 of 1922 and more than 50% of that monthly minimum
wage (excluding any allowance, overtime or bonus). Finally, it will empower
the Commissioner-General to appoint a resident representative of a non-resident
employer who fails or refuses to appoint such representative when requested
to do so by the Commissioner-General.
will amend the Twenty-First Schedule (''Residents' Tax on Interest'')
to the Income Tax Act, by making it clear that, in the case of Treasury
bills, banker's acceptances and other discounted instruments, withholding
tax on income earned from such instruments is to be deducted at the time
the instrument is purchased, and not at the time of its maturity.
will substitute a new Schedule for the present Twenty-Sixth Schedule (''Informal
Traders' Tax'') to the Income Tax Act. The new Schedule sets out the procedure
for the collection of presumptive tax. The will be collected from informal
traders, small scale miners, and operators of taxicabs and omnibuses as
defined in paragraph 1 of the Schedule. Informal traders will (as is presently
the case with ''informal traders' tax'', which the presumptive tax will
replace) be charged a presumptive tax when they pay rent to local authorities
for accommodation or when they pay rent to other persons for their business
premises. The rate of the tax is 10% of each dollar of the rent thus paid
(or other rate as charged from time to time by the Finance Act). The local
authorities or other persons to whom they pay the tax (they are called
''lessors'' in the Schedule) will have to remit amounts of tax paid to
the Commissioner-General within thirty days after they receive the payments.
Failure on the part of a lessor to remit the payments will render him
personally liable for the tax. Failure on the part of an informal trader
to pay the tax will entitle the lessor to cancel his lease.
scale miners will have a presumptive tax of 5% of the value of precious
stones or precious metals (or other rate as charged from time to time
by the Finance Act) deducted by the persons (''agents'') to whom they
sell these stones or minerals. The agents will then have to remit the
amounts of tax thus collected to the Commissioner-General on or before
the twentieth day of the month following that in which the purchase was
made. Failure on the part of an agent to remit the tax will render him
or her personally liable for the tax.
of taxicabs and omnibuses will pay a presumptive tax of a fixed amount
per quarter year based on the passenger capacity of the vehicle they operate.
14 of the Schedule provides the presumptive taxpayers are not exempted
from submitting tax returns under section 37 of the Act unless, in the
case of small-scale miners and operators of taxicabs and omnibuses, their
income derived exclusively from such activities and is below a certain
prescribed level. However, all presumptive tax payers are entitled to
receive a tax clearance certificate in respect of the presumptive tax
which they have paid, whether or not they have submitted returns under
section 37 of the Act.
to Chapter II of the Finance Act prescribes the rates of stamp duty payable
on various instruments. This clause will increase the stamp duty payable
on cheques from $500 to $2 000.
will increase the rate of capital gains withholding tax marketable securities
from 5% to 10%.
will amend the Schedule to Chapter IV of the Finance Act, which sets out
the general rate of value added tax. The effect of the amendment is to
increase the general rate of value added tax from 15% to 17.5%. The new
rate will come into operation on the 1st September this year.
clause will also impose a special rate of value added tax of 22.5% on
the supply of cellular telecommunications services in the course or furtherance
of the supply of such services by a registered operator.
will amend the interpretation section of the Value Added Tax Act by including
a definition of ''motor vehicle'' for the purpose of the provisions of
the Act concerned with the taxation of sales of second hand motor vehicles.
will amend section 11 (''Exempt supplies'') of the Value Added Tax Act
by extending the tax exemption in favour of donations of motor vehicles
between spouses to donations by either spouse to their children.
Act, 2004, inserted a new section in the Value Added Tax Act providing
for the deferment of the collection of VAT on the importation of certain
goods of a capital nature. The effect of this clause will be to extend
the scope of that provision to plant, equipment and machinery used for
the purposes of the agricultural and aviation industries.
will amend section 15 (''Calculation of tax payable'')of the Value Added
Tax Act to enable tax invoices to be presented for input tax purposes
in any tax period subsequent to the period in which they were issued or
period of 12 months from the date of issue of the tax invoice, whichever
is the shorter period.
will insert a new section in the Value Added Tax providing for refunds
of tax paid by persons who are exempted from the payment thereof.
will enable the Commissioner General to appoint a person, for example
a bank or local representative of an importer of services into Zimbabwe,
to be an agent for the purpose of collecting valued added tax in respect
of such those services.
will amend section 202 (''Interest on unpaid duty and payment of fines
and duties by instalments'') of the Customs and Excise Act by extending
its provisions to the payment of unpaid duty on smuggled goods that are
found to be liable for such duty.
will insert a new section in the Revenue Authority Act to provide for
the issuance by the Commissioner-General of ''tax clearance certificates''
to persons who require proof that they have paid any relevant tax charged
under any revenue Act administered by the Zimbabwe Revenue Authority (namely
the Income Tax Act, the Capital Gains Tax Act, the Customs and Excise
Tax, the Value Added Tax Act and the Stamp Duties Act).
make further provision for the revenues and public funds of Zimbabwe and
to provide for matters connected therewith or incidental thereto.
ENACTED by the President and Parliament of Zimbabwe.
1. Short title.
Amendments to Chapter I of Finance Act [Chapter 23:04]
of section 14 of Cap. 23:04.
3. New section substituted for section 22A of Cap. 23:04.
4. New section substituted for section 22C of Cap. 23:04.
5. Amendment of Schedule to Chapter I of Cap. 23:04.
Amendments to Income Tax Act [Chapter 23:06]
6. Amendment of section 2 of Cap. 23:06.
7. New section substituted for section 36C of Cap. 23:06.
8. Amendment of section 61 of Cap. 23:06.
9. Amendment of section 80 of Cap. 23:06.
10. New section substituted for section 80A of Cap. 23:06.
11. Amendment of section 90 of Cap. 23:06.
12. New section substituted for section 97 of Cap. 23:06.
13. Amendment to Third Schedule to Cap. 23:06.
14. Amendment to Thirteenth Schedule to Cap. 23:06.
15. Amendment of Twenty-First Schedule to Cap. 23:06.
16. New Schedule substituted for Twenty-Sixth Schedule to Cap. 23:06.
17. Amendment of Schedule to Chapter II of Cap. 23:09
CAPITAL GAINS TAX
18. Amendment of section 39 of Cap. 23:04.
VALUE ADDED TAX
Amendments to Chapter IV of Finance Act [Chapter 23:04]
19. Amendment of Schedule to Chapter IV of Cap. 23:04.
Amendments to Value Added Tax [Chapter 23:12]
20. Amendment of section 2 of Cap. 23:12.
21. Amendment of section 11 of Cap. 23:12.
22. Amendment of section 12A of Cap. 23:12.
23. Amendment of section 15 of Cap. 23;12.
24. New section inserted in Cap. 23:12.
25. New section substituted for section 48 of Cap. 23:12.
26. Amendment of section 83 of Cap. 23:12
CUSTOMS AND EXCISE
27. Amendment of section 202 of Cap. 23:02.
AMENDMENT TO REVENUE AUTHORITY ACT [CHAPTER 23:11]
28. New section inserted in Cap. 23:11.
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