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Finance Bill, 2007 (H.B. 10, 2007)
September 06, 2007

The Minister of Finance presented his Mid-Term Fiscal Policy Review and Supplementary Budget in the House of Assembly on Thursday 6th September. The Finance Bill giving effect to the Minister’s proposals was then passed by the House the same afternoon, without amendment, and transmitted to the Senate.

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Finance Bill, 2007

MEMORANDUM

This Bill will amend the Finance Act [Chapter 23:04], the Income Tax Act [Chapter 23:06], the Stamp Duties Act [Chapter 23:09], the Value Added Tax Act [Chapter 23:12] and the Customs and Excise Act [Chapter 23:02]. In more detail, the individual clauses of the Bill provide as follows:

Clause 1
This clause sets out the bill's short title.

Clause 2
This clause will substitute section 3 of the Finance Act so as to empower the Minister to change by regulations any rate of tax, duty, levy or other charge that is charged or levied in terms of any Chapter of the Act, in advance of the Charging Act by which those rates, duties or levies are fixed.

Clause 3
Section 14 of the Finance Act prescribes the rates of income tax payable by various classes of taxpayers.
This clause will alter the income "bands" according to which rates of income tax are calculated. The main alteration is to the minimum level of income that will attract income tax. At present this minimum is $1 500 000 a month, and this clause will increase that amount to $4 000 000 a month. The new bands will apply for the period from the 1st September, 2007.

Clause 4
This clause will increase the rate of automated financial transactions tax (the tax effected on cash withdrawals effected through an A.T.M.) from $50 to $2 500 per withdrawal, with effect from the 1st October, 2007.

Clause 5
This clause will increase the tax based on the presumed income of certain businesses ("presumptive tax"). The businesses in question are operators of taxicabs, goods vehicles and driving schools.

Clause 6
The Finance (No. 2) Act, 2005, changed the basis on which carbon tax is charged to owners of vehicles resident in Zimbabwe from a direct tax into a consumption tax payable at the point of importation by oil companies per litre of petroleum products imported by them. This clause seeks to raise the level of that tax from $100 per litre of imported petroleum product to $5 000, payable with effect from the 10th September, 2007.

Clause 7
The NOCZIM debt redemption levy was introduced by the Finance Act, 2003, with effect from the 1st December, 2003, to enable NOCZIM, the State petroleum company, to liquidate its debt obligations. This clause seeks to increase this levy from $60 per litre to $2 500 per litre of a petroleum product purchased by an oil company from NOCZIM or imported by an oil company, with effect from the 10th September, 2007.

Clause 8
This clause will partly replace the Schedule to Chapter I of the Finance Act, which sets out the rates of income tax payable by various classes of taxpayers. As indicated in connection with clause 3 above, the income "bands" will be altered.

Clause 9
This clause will insert a new Chapter in the Finance Act, which sets out the rates of rental to be charged on holders of offer letters in respect of, or lessees of, Model A2 farms allocated to them by the State. In the case of a lessee, the rentals specified in the Schedule will be substituted for the rentals specified in the lessee's land settlement lease, or, where the rental consists of two components relating to the rental for the farm and the purchase of any improvements thereon, the rentals specified in the Schedule will be substituted for the first-mentioned component of the rental specified in the land settlement lease.

Clause 10
Section 8(1) of the Income Tax Act defines the term "gross income" for the purposes of the Act. Gross income derivable from employment remuneration includes the value of certain benefits (commonly known as "fringe benefits") afforded to employees, such as the value of motor vehicles. For the purposes of taxation motor vehicles have a specified deemed value. In paragraph (a), the deemed motor vehicle benefit, which varies according to the engine capacity of the vehicle, has been increased, from $100 000 to $7 200 000 for vehicles with the lowest engine capacity (i.e. below 1 500 cc) and from $260 000 to $20 000 000 for vehicles with the highest engine capacity (i.e. above 3 000 cc).

Clause 11
The Finance Act, 2005, provided for the taxation of income from employment that is earned in the form of convertible currency. This clause will amend the Thirteenth Schedule ("Employees Tax") of the Income Tax Act to remove references to the "auction rate", which is no longer used to determine the value of the Zimbabwe dollar in relation to other currencies.

Clause 12
The Schedule to Chapter II of the Finance Act prescribes the rate of stamp duty payable on various instruments. This clause will increase the stamp duty payable on cheques from $100 to $5 000 with effect from the 1st October, 2007.

Clause 13
The Finance Act, 2003, substituted section 115 of the Customs and Excise Act by another section which authorised the Minister to require persons, including residents of Zimbabwe, to be charged in foreign currency for the importation of goods designated by the Minister by notice in a statutory instrument to be luxury items. This designation was eventually made by means of the Customs and Excise (Designation of Luxury Items) Notice, published as Statutory Instrument 80A of 2007, on the 5th April, 2007. Since the it has been found that payment of the required duty in foreign currency can be avoided where the importer of the luxury item in question refuses to make due entry of the items (usually vehicles), and the items are subsequently sold by ZIMRA at public auction. The purpose of this amendment to section 115 of the Customs and Excise Act is to provide that the bidding for luxury items at such auctions must be done in a convertible currency.

Finance Bill, 2007

Arrangement of Sections

PART I
PRELIMINARY

Section

1. Short title.
2. Interpretation.

PART II
INCOME TAX

Amendments to Chapter 1 of Finance Act [Chapter 23:04]

2. New section substituted for section 3 of Cap. 23:04.
3. Amendment of section 14 of Cap. 23:04.
4. Amendment of section 22B of Cap. 23:04.
5. Amendment of section 22C of Cap. 23:04.
6. Amendment of section 22E of Cap. 23:04.
7. Amendment of section 22H of Cap. 23:04.
8. Amendment of Schedule to Chapter I of Cap. 23:04.
9. New Chapter inserted in Cap. 23:04.

Amendments to Income Tax Act [Chapter 23:06]

10. Amendment of section 8 of Cap. 23:06.
11. Amendment of Thirteenth Schedule to Cap. 23:06.

PART III
STAMP DUTIES

12. Amendment of Schedule to Chapter II of Cap. 23:04

PART IV
CUSTOMS AND EXCISE

13. New section substituted for section 115 of Cap. 23:02.

PRESENTED BY THE MINISTER OF FINANCE

BILL

To 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 the Parliament of Zimbabwe.

1 Short title
This Act may be cited as the Finance Act, 2007.

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