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Finance (No.3) Bill, 2009
December 11, 2009

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 (No.3) Bill, 2009

MEMORANDUM

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

PART I

PRELIMINARY

Clause 1
This clause sets out the Bill’s short title.

PART II

INCOME TAX

Clause 3
This clause will repeal and substitute section 14 of the Finance Act. This contains matter that is no longer relevant in our multi-currency system. This section will apply to the income tax periods after the 1st of January, 2010.

Clause 4, 5, 6, 7 and 8
These clauses relate provide for the reduction in rate of Non-resident shareholders tax, Resident shareholders tax, Non-resident’s tax on fees, Non-residents tax on interest and Residents tax on interest; respectively.

Clause 9
This clause amends the rates of certain presumptive taxes and introduces new categories of presumptive taxpayers. Presumptive tax chargeable will include operators of restaurants or bottle stores, and cottage industry operators.

Clause 11
This clause amends the Schedule to Chapter I of the Finance Act, by the repeal of Parts II and III and the substitution thereof in line with the amendment made by Clause 3.

Clause 12
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. The purpose of the amendment sought by this clause is to increase these deemed values. The deemed annualised motor vehicle benefit, which varies according to the engine capacity of the vehicle, will vary from US$1800 for vehicles with the lowest engine capacity (i.e. below 1500cc) to US$4800 for vehicles with the highest engine capacity (i.e. above 3000cc).

Clause 12
This clause repeals section 9 of the Income Tax Act; this eradicates the option by a taxpayer who is involved in the business of mining to spread taxable income over a period of four years, where income is derived from the sale of a mining claim.

Clause 13
This clause amends section 15 of the Income Tax Act to provide for repeal of the deduction of any doubtful debts due to the taxpayer and the double deduction for scientific and educational institutions.

Clause 15 and 21
These clauses will abolish the Banking Institution Levy.

Clause 17
The Third Schedule to the Income Tax Act lists amounts that are exempt from income tax.
Paragraph 4 (o) and (p) of the Schedule exempts bonuses and terminal benefits given to employees for their performance or on their retrenchment up to a certain amount, which will be adjusted by this clause.
The clause also removes certain outdated exemptions.

Clause 18
This clause amends the Fourth Schedule to the Income tax Act to allow the taxpayer to claim special initial allowance at a rate of twenty-five per centum over a period of four years.

Clause 19
The Sixth Schedule to the Income Tax Act sets out the limits to contributions to pension and benefit funds that can be deducted from tax in the hands of an employee and an employer. This clause will increase the specified maximum amounts of deduction.

Clause 20
This clause amends the paragraph 1 of the Twenty-Sixth Schedule of the Income Tax Act, which interpretations for terms used in the Schedule, these include definitions for, “cross-border trade,” “operator,” and “cottage industry;” among others. Clause 10 further amends the Income Tax Act to include Parts IVD and IVE which legislates for presumptive tax in relation to restaurant or bottle store openers and cottage industry operators, respectively.

Clause 24
This clause will introduce a 15% tax on the vale of unbeneficiated chrome that is exported from Zimbabwe.

Clause 25
Clause 18 of the Bill amends section 28 of the Value Added Tax Act, by changing the day upon which returns and payments of tax are submitted and paid from the fifth day to the tenth day

Clause 29
This clause widens the class of those persons who may be made accountable to a customs officer for disclosing the particulars of uncustomed goods brought by rail to any part of entry.

Clause 33
This clause will substitute Chapter VII (“Mining Duty and Fees”) of the Finance Act with the object of incorporating in it the charging of royalties on minerals and mineral-bearing products, which charges were reintroduced (after a long interval) by the Minister responsible for mines in General Notice 381 of 2003. In future, the rates of royalties will be fixed by Parliament through the Finance Act.

Clauses 34, 35, 36, 37 and 38
These clauses will amend the Mines and Minerals Act by updating the monetary amounts that are presently imposable on miners under that Act by way of deposits as security for the working of claims, failure to work claims, penalties for the abandonment of claims, etc.

Clauses 39, 40, 41, 42 and 43
These clauses will amend sections 244, 245, 251, 252 and 253 of the Mines and Minerals Act in order to bring it into line with the new fiscal regime for mining royalties referred to in clause 33 above.


Finance (No.3), 2009

Arrangements of Sections

PART I
PRELIMINARY

Section
1. Title.part ii

INCOME TAX

Amendments to Chapter I of Finance Act [Chapter 23:04]
2. New section substituted for section 10 of Cap. 23:94.
3. New section substituted for section 14 of Cap. 23:04.
4. Amendment of section 15 of Cap. 23:04.
5. Amendment of section 17 of Cap. 23:04.
6. Amendment of section 19 of Cap. 23:04.
7. Amendment of section 21 of Cap. 23:04.
8. Amendment of section 22 of Cap. 23:04.
9. Amendment of section 22C of Cap. 23:04.
10. Repeal of section 22F of Cap. 23:06.
11. Amendment of Schedule to Chapter I of Cap. 23:04.
Amendments to Income Tax Act [Chapter 23:06]
12. Amendment of section 8 of Cap. 23:06.
12. Repeal of section 9 of Cap. 23:06.
14. Amendment of section 15 of Cap. 23:06.
15. Repeal of section 34F of Cap. 23:06.
16. Amendment of section 80 of Cap. 23:06.
17. Amendment of Third Schedule to Cap. 23:06.
18. Amendment of Fourth Schedule to Cap. 23:06.
19. Amendment of Sixth Schedule to Cap. 23:06.
20. Amendment of Twenty-Sixth Schedule to Cap. 23:06.
21. Repeal of Twenty-Ninth Schedule to Cap. 23:06.
22. Amendments of specified periods in Cap. 23:06.

PART III
VALUE ADDED TAX
23. Amendment of section 6 of Cap. 23:12.
24. Amendment of section 12 of Cap. 23:12.
25. New section inserted in Cap. 23:12.
26. Amendment of section 28 of Cap. 23:12.
27. Amendment of section 39 of Cap. 23:12.
28. Repeal of section 51 of Cap. 23:12.

PART IV
CUSTOMS AND EXCISE
29. Amendment of section 24 of Cap. 23:02.
30. Amendment of section 39 Cap. 23:02.
31. Amendment of section 172BB of Cap. 23:02.

PART V
REVENUE AUTHORITY
32. New section inserted in Cap. 23:11.

PART VI
MINES AND MINERALS
Substitution of Chapter VII of Finance Act [Chapter 23:04]
33. Substitution of Chapter VII of Cap. 23:04.
Amendments to Mines and Minerals Act [Chapter 21:05]
34. Amendment of section 87 of Cap. 21:05.
35. Amendment of section 93 of Cap. 21:05.
36. Amendment of section 99 of Cap. 21:05.
37. Amendment of section 100 of Cap. 21:05.
38. Amendment of section 113 of Cap. 21:05.
39. Amendment section 244 of Cap. 21:05.
40. Amendment section 245 of Cap. 21:05.
41. Amendment section 251 of Cap. 21:05.
42. Amendment section 252 of Cap. 21:05.
43. Amendment section 253 of Cap. 21:05.
44. Repeal of General Notices 381 of 2003 and 16 of 2004.

PART VII
VALIDATION
45. Validation of SI 135C of 2008.
SCHEDULE: Amendments of Specified Periods in Cap. 23:06


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 Parliament of Zimbabwe.

PART I
PRELIMINARY

1 Short title
This Act may be cited as the Finance (No. 3) Act, 2009.

PART II
INCOME TAX
Amendments to Chapter I of Finance Act [Chapter 23:04]

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