Corporate Tax 2023

Last Updated March 14, 2023


Law and Practice


Atherstone & Cook has provided legal services in Harare, Zimbabwe, for more than 60 years, during which time it has served clients promptly, efficiently and authoritatively. It has built a reputation for providing solid advice that has subsequently been upheld by the courts. The firm has tended to concentrate on commercial work, including advising firms wishing to invest in Zimbabwe. It has considerable experience in this area, including specialising in the tax regime, exchange control restraints, indigenisation requirements and generally all local laws affecting investment in Zimbabwe. The firm has acted for all four recognised leading accounting firms, many of the major banks, leading commercial firms, many firms listed on the Zimbabwe Stock Exchange, numerous external legal firms in South Africa and leading solicitor firms in England, the United States, Asia and Europe.

Businesses generally adopt a corporate form. The alternative forms of corporate structures are private business corporations and other business entities.


The following business entities are registrable under the Companies and Other Business Entities Act (Chapter 24:31):

  • public limited company;
  • private limited company;
  • company limited by guarantee;
  • co-operative company;
  • foreign company; and
  • private business corporation.

A public company is broadly defined as a company that is neither private nor limited by guarantee. The securities of the public company may be freely offered to the public, which facilitates the raising of capital therefrom. The shareholders in a public company may freely transfer their securities. A private company has the following characteristics:

  • the transferability of shares is restricted;
  • the number of members is limited to 50;
  • the liability of members is limited to the number of shares held by each member respectively; and
  • shares are prohibited from being offered to the public.

A company limited by guarantee has no share capital but its Memorandum of Association limits the liability of its members to such amount as the members respectively undertake to contribute to the assets of the company in the event of it being wound up. A co-operative company is a company other than a private company, whose main object as stated in its Memorandum of Association is the provision for its members of a service facilitating the production or marketing of agricultural produce or livestock, or the sale of goods to its members. The right to transfer shares is restricted. A foreign company is an entity incorporated in a jurisdiction outside of Zimbabwe.

Private Business Corporations

This form of business entity is mainly meant for small businesses. It can accommodate sole traders and has a legal persona of its own, separate from its members. Only individual natural persons acting in their own rights can be members of a private business corporation.

Other Business Entities

These include partnerships, joint ventures, syndicates and consortiums:

  • a partnership is a formal arrangement between two or more parties to manage and operate a business and share its profits;
  • a joint venture is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task;
  • a syndicate is a self-organising group of individuals, companies, corporations or entities formed to transact some specific business, to pursue or promote a shared interest; and
  • a consortium is an association of two or more individuals, companies, organisations or governments (any combination of these entities) with the objective of participating in a common activity or pooling resources to achieve a common goal.

All these entities are taxed as separate legal entities.

Partnerships and joint ventures are the transparent entities commonly used. In most cases where they are used, they would be mandatory by law. Partnerships are commonly adopted in the legal fraternity and in the accounting or financial sectors. Joint ventures are commonly used as vehicles of investment in the mining and infrastructure sectors.

Zimbabwe taxes on a source basis rather than a residence basis, but also taxes its inhabitants on income earned from activities outside the country. The object of the source basis is to tax only income that arises from activities in the country itself. A rigid application of the source principle may lead to inequities, and the law has created exceptions by using the concept of “deemed source”, whereby the source is outside of Zimbabwe but is regarded as a source within Zimbabwe. The law is concerned with the originating cause of the income, so one must identify where the originating cause is located, taking into account the deeming provisions.

The tax rate paid by incorporated businesses and businesses owned by individuals directly or through transparent entities is 24%.

Income tax in Zimbabwe is charged on income. In terms of the Income Tax Act (Chapter 23:06), tax is chargeable on “gross income”, which means the total amount received by or accrued to or in favour of a person or deemed to have been received by or to have accrued to or in favour of a person in any year of assessment from a source within or deemed to be within Zimbabwe, excluding any amount that is of a capital nature.

There are no specific incentives for technology investments. However, if the technology investment is located in an area that is designated as a special economic zone (SEZ), the investment will be tax exempt for the first five years, and will have a 15% tax rate thereafter.

With respect to R&D expenses, a deduction is allowed for any amount of expenditure incurred by the taxpayer during the year of assessment in carrying out experiments and research relating to its trade.

Build-Own-Operate-Transfer and Build-Operate-Transfer Arrangements

All taxpayers in these types of arrangements enjoy a tax holiday for the first five years.

Contractors may enter into contracts with the State or statutory corporations, under which they undertake to construct infrastructure for the State or statutory corporations in consideration for the right to operate or control such infrastructure for a specified period, after which the contractor will transfer ownership or control to the State or statutory corporation.

The second five years are taxed at 15%, and the taxpayer will be taxed at the normal rate thereafter.

Manufacturing Companies

Since 1 January 2015, the rates of tax for manufacturing or processing companies that export are as follows:

  • if between 30% and 41% of its output is exported: 20%;
  • if between 41% and 51% of its output is exported: 17.5%; and
  • if more than 51% of its output is exported: 15%.

Mining Companies

All capital expenditure on exploration, development and operating incurred wholly and exclusively for mining operations is allowed in full.

There is no restriction on the carryover of tax losses; these can be carried forward for an indefinite period.

The taxable income of a holder of a special mining lease is taxed at a special rate of 15%.

Special Initial Allowance (SIA)

This is a capital allowance, which ranks as a deduction. It is allowed on expenditure incurred in the construction of new industrial buildings, farm improvements, railway lines, staff housing and tobacco barns. Additions or alterations to existing items are also allowed.

SIA is also allowed on articles, implements, machinery and utensils purchased for the purposes of trade. The definition of “articles, implements, machinery and utensils” now includes tangible or intangible property in the form of computer software that is acquired, developed or used by the taxpayer.

The allowance is optional; once claimed, it replaces wear and tear.

SIA is allowed at the rate of 25% of cost from year one for the next three years.

The rate of SIA for small to medium enterprises is 100%, of which 50% is allowed in the first year of use, with the balance over two years at 25% being accelerated wear and tear. These rates have been in effect since 1 January 2011.

The rate of SIA for a licensed investor is 100%, of which 50% is allowed in the first year of use and the balance over two years at 25% is accelerated wear and tear. These rates have been in effect since 1 January 2017.

Farmers' Special Deductions

Farmers are allowed special deductions over and above the normal deductions. Examples include expenditure on fencing, clearing and stamping land, sinking boreholes and wells, and aerial and geophysical surveys.

Value-Added Tax (VAT)

Services supplied by operators of facilities designated as tourist facilities in terms of the Tourism Act (CHapter 14:20) (Section 10(2)q)

Tourist facility operators conducting business in approved tourism development zones and operators of hunting safaris are required to charge VAT at 0% for services offered to persons who are not residents of Zimbabwe and who are required under the Exchange Control Act to pay for such services in a foreign currency. Such operators end up in a refund position for goods and services acquired locally.

Farming inputs and equipment (Section 10 a. r. w. 2nd schedule of the Value Added Tax General Regulations (S.I.273/2003))

Most farm inputs are subject to VAT at 0%, such as animal feed, animal remedies, fertiliser, plants, seeds, pesticides and equipment or machinery used for agricultural purposes.

Deferment of collection of VAT on the importation of capital goods

VAT could be deferred on some capital equipment for exclusive use in the mining, manufacturing, agricultural and aviation industries, whose investment generally relies on imported capital. Any person who produces proof to the satisfaction of the Commissioner General of the Zimbabwe Revenue Authority (ZIMRA) that they have imported goods of a capital nature for their own use can qualify for this incentive.

An assessed loss is recovered in the next tax year.

Zimbabwe has thin capitalisation rules based on a debt to equity ratio of 3:1. A portion of the overall interest may be disallowed if this ratio is exceeded. Any disallowed interest may be treated as a deemed dividend and subject to withholding tax.

An assessed loss is utilised per company; there are no intra-company transfers of losses. The losses can only be utilised in the ensuing tax year by the respective companies, not retrospectively.

Capital gains tax is chargeable from a source within Zimbabwe on a sale or deemed sale of a specified asset. The sale must be in Zimbabwe or deemed to be in Zimbabwe, and must generate a gain. The specified assets are immovable property, any marketable security and any right or title to property – whether tangible or intangible – that is registered or required to be registered in terms of the Mines and Minerals Act, the Patents Act, the Trade Marks Act, the Industrial Designs Act, the Brands Act or the Copyright and Neighbouring Rights Act. Sections 10 and 11 of the Capital Gains Tax Act (Chapter 23:01) provide for exemptions and deductions, while Section 15 provides for an exemption in respect of the transfer of assets between companies that are under the same control. Where a loss has been incurred on the disposal of an asset, a set-off is allowed against any capital gain on the disposal of another specified asset in the same year of assessment.

VAT is payable on transactions, and is applicable in all situations where goods or services move from one person to another in such a manner that the recipient is said to receive enhanced value. The rate of tax is fixed, currently at 15%.

Incorporated businesses are not subjected to any other notable taxes.

Most local businesses operate in corporate form as private companies.

The income of individuals from trade and investments and the income of companies are charged at the same rate: 24%.

There are no specific rules that prevent closely held corporations from accumulating earnings for investment purposes.

Individuals are taxed on net gains at 20% in respect of sales of shares in closely held corporations acquired after 22 February 2019, and at 5% of the proceeds in respect of shares acquired before 22 February 2019.

The dividends from companies listed on the Zimbabwe Stock Exchange are taxed at a rate of 10%. This is a withholding tax, whilst the tax on the gain in respect of the sale of shares by individuals in publicly traded corporations is 4% of the capital gain if such security was held for less than 180 days on the date of its sale.


A withholding tax of 15% is payable on interest accruing to any person resident in Zimbabwe, calculated on the gross amount of interest. This applies to interest arising from a registered banking institution or unit trust scheme. The tax withheld is a final tax, and the financial institution is responsible for withholding the tax.

Non-resident investors, however, are currently exempt from any withholding tax on interest.


A withholding tax called non-resident shareholders tax is payable on dividends declared by a Zimbabwean company to a non-resident holding company, at a rate of 15%. Dividends from companies listed on the Zimbabwe Stock Exchange have a rate of 10%. In the case of a dividend distributed from a security that is listed on the Victoria Falls Stock Exchange, the rate of tax is 5%. The non-resident shareholders’ tax is payable within 30 days after the dividend declaration.


A withholding tax on royalties is payable once a Zimbabwean company pays a royalty to a non-Zimbabwean resident. Withholding tax is levied at a rate of 15% and is payable within ten days of the date of payment. A royalty includes payment for the use or right to use any patent or design, trade mark, copyright, model, pattern, plan, formula or process, or any other property or right of a similar nature. It also includes the imparting of any scientific, technical, industrial or commercial knowledge or information for use in Zimbabwe. The amount payable should therefore be carefully considered in order to determine whether it represents a royalty.

Like income tax, withholding tax is payable upon accrual.

A payer or an agent in Zimbabwe who fails to withhold or pay any amount of non-resident's tax on royalties shall be personally liable for the payment to the Commissioner. The Commissioner may impose a further amount equal to 100% of such non-resident tax on royalties as a penalty and may institute collection measures to collect any unpaid non-resident tax on royalties.

Zimbabwe has signed several double taxation agreements (DTAs), which are meant to avoid or mitigate double taxation of the same income in the two countries to the agreement – ie, where a business entity operates in the two territories. The agreements restrict some withholding taxes to the amounts specified. The DTAs offer reduced rates of withholding taxes on dividends, interest, royalties and technical fees. Almost all the DTAs that have been signed limit the rate of tax to 10% or less.

The primary tax treaties are with the following countries:

  • Bulgaria;
  • Canada;
  • China;
  • France;
  • Germany;
  • Malaysia;
  • Mauritius;
  • the Netherlands;
  • Norway;
  • Poland;
  • South Africa;
  • Sweden; and
  • the United Kingdom.

Local authorities challenge the use of treaty country entities by non-treaty country residents.

The biggest transfer pricing issues for inbound investors operating through a local corporation are the provisions in the Income Tax Act on income splitting and associate transactions.

ZIMRA holds the general position that 80% of fiscal revenue loss is due to transfer pricing, and may challenge the use of related-party limited risk distribution arrangements. As such, the tax avoidance provision is widely interpreted to include all transactions or schemes that have been entered into with the aim of avoiding, postponing or reducing liability, and if the Commissioner is of the opinion that the avoidance of such liability was the sole purpose of the transaction.

The transfer pricing rules generally mirror the OECD standards.

The local authorities are more aggressive on transfer pricing now, particularly when a resident in Zimbabwe engages in any transaction with a person resident in a jurisdiction that is considered to provide a taxable benefit in relation to that transaction.

The local authorities are also strictly enforcing the submission of returns disclosing the details of the transaction or contemplated transaction by taxpayers that engage in or will engage in a transaction with an associated person and the keeping of the prescribed documentation that will assist the Commissioner to ascertain whether a transaction was conducted in accordance with the arm’s-length principle.

International transfer pricing disputes are resolved through double tax treaties and mutual agreement procedures, although the latter are not commonly used.

Compensating adjustments are allowed when a transfer pricing claim is settled.

The local branches and local subsidiaries of non-local corporations are considered as permanent establishments, and are subject to the normal income tax rules as resident taxpayers, subject to any applicable exceptions.

The capital gains of non-residents on the sale of stock in local corporations will be subject to capital gains tax in Zimbabwe. The tax will apply where the gain is on the shares of a non-local holding company that owns the stock of a local corporation directly.

A tax treaty may eliminate or reduce the capital gains tax.

A change of control will trigger tax in Zimbabwe if there is a direct change of ownership in respect of a local corporation.

No formulas are currently applied to determine the income of foreign-owned local affiliates.

The Income Tax Act prohibits the deduction of amounts incurred in excess of specified amounts of management and general administration expenses. Any expenditure incurred prior to the commencement of trade or during the production of income in excess of 0.75% is disallowed. A formula is applied to obtain the amount.

Constraints are only placed on borrowing by local affiliates from non-local affiliates. If the ratio of debt to equity of the company, branch or subsidiary exceeds 3:1, then the company is considered to have thin capitalisation.

The foreign income of local corporations will form part of a local corporation’s taxable income, and will be subject to tax in Zimbabwe at the corporate tax rate if the income is deemed to be from a source in Zimbabwe. The Income Tax Act deems an amount derived from a source outside Zimbabwe by way of interest or dividends on securities that is received by or accrues to or in favour of a person to be income from a source within Zimbabwe, if the person is ordinarily resident in Zimbabwe at the time the amount is so received or so accrues or is deemed to be so received or to so accrue.

Relief in respect of any foreign taxes paid will be granted, unless it is established that the true source of the income is Zimbabwe.

Local expenses and losses may be treated as non-deductible because of their attribution to exempt income, to the extent to which they were incurred in the production of the exempt income.

The dividends from foreign subsidiaries of local corporations are taxed at a flat rate of 20%. However, relief will be granted by allowing any foreign tax suffered as a tax credit (up to a maximum of the 20% local rate of tax).

The income earned through intangibles developed by local corporations and used by non-local subsidiaries will be subject to tax in Zimbabwe, as part of the company’s income.

Zimbabwe currently has no controlled foreign corporation rules.

There are no specific rules relating to the substance of non-local affiliates.

Capital gains tax is levied on the sale of shares that are registered in Zimbabwe. The sale of shares in non-local affiliates will be subject to taxation in the country of incorporation, and the provisions of any DTA will apply on the income received in Zimbabwe by the local corporation.

The Income Tax Act contains an overarching anti-avoidance provision (Section 98), the aim of which is to determine the tax liability for any transaction, operation or scheme entered into or carried out with the effect of avoiding or postponing liability for any tax, or reducing the amount of the tax payable. The transaction, operation or scheme must have been entered into in a manner that would not normally be employed when entering into a scheme of that nature, or the transaction must create rights that would not normally be created between persons dealing at arm’s length.

The anti-avoidance provision also sets out the law governing income splitting, transactions between associates and the reporting of unprofessional conduct.

The Commissioner of ZIMRA publishes an annual public notice calling on taxpayers to furnish their returns for assessment. When tax auditors at ZIMRA detect possible misdemeanours regarding tax and/or customs issues from the information they have, the Authority initiates investigations. The information can be obtained from investigations that will be underway already, or it can be received from the public or other sources.

Zimbabwe has implemented BEPS recommended changes on the taxation of transactions between associated entities.

The government of Zimbabwe has been incorporating BEPS principles to align with the rest of the world on the tax treatment of certain transactions. BEPS Pillar One and Pillar Two are yet to be given full effect in addressing the tax challenges arising from the digitalisation of the world economy.

International tax is an area that is still developing in Zimbabwe.

Zimbabwe is yet to develop a competitive tax policy.

Zimbabwe is yet to develop a competitive tax system.

This area of taxation is still being considered, and the BEPS process will certainly be taken into account as international guidelines.

Zimbabwe has a territorial tax system, whereby income earned by companies in foreign countries will only be taxed in Zimbabwe if it is deemed to be from a source within Zimbabwe. There are currently no specific interest deductibility restrictions tailored to that regime. Any interest deductibility restrictions will reduce the cost of investing in the country.

The CFC proposals are seen as being generally beneficial, as they assist in managing or eradicating tax evasion.

Anti-avoidance rules will have an impact on investors if a transaction, operation or scheme has been entered into or carried out with the aim of avoiding or postponing liability for any tax, or of reducing the amount of such liability. The Commissioner of the Revenue Authority must be of the opinion that the transaction or operation has been entered into in a manner that would not normally be employed, or that it has created rights or obligations that would not normally be created between persons dealing at arms’ length, and that the avoidance or postponement of such liability was the sole purpose of the transaction.

Transfer pricing rules were introduced for the first time in Zimbabwe in 2016, with a major focus on arms-length principles. In 2019, a requirement to submit annual transfer pricing returns to the Commissioner showing transactions entered into between controlled and/or associated enterprises was introduced. This was considered to be a major requirement by many organisations.

Profits from intellectual property have always been taxed.

Zimbabwe is in favour of provisions for transparency and country-by-country reporting through various legislative instruments.

Zimbabwe has introduced a digital services tax for electronic and e-commerce services, levied at 5% on all non-resident satellite broadcasting service providers and electronic commerce operators who receive revenues in excess of USD500,000 in any year of assessment from the provision or delivery of services to persons resident in Zimbabwe.

Zimbabwe amended the Income Tax Act to tax the income earned by satellite broadcasting service providers and electronic commerce operators for digital services provided by non-residents to customers based in Zimbabwe. The tax is levied in respect of revenues in excess of USD500,000. In implementing the digital taxation, reference is made to Action 1 of the OECD/G20 BEPS plan.

VAT was also amended to tax the supply of radio and television services from outside Zimbabwe to an address in Zimbabwe, or the supply of electronic services by an electronic commerce operator domiciled outside Zimbabwe to a person resident in Zimbabwe.

In Zimbabwe, the nature and source of income determine whether or not it is taxable. With respect to offshore intellectual property that is deployed within Zimbabwe, if a payment is made to a non-resident from a source within Zimbabwe for the right to use such intellectual property, the amount paid will be taxed at 15% in the form of a withholding tax on royalties.

The provisions on non-residents’ tax on royalties do not distinguish between owners of intellectual property in tax havens and in countries that have the benefit of a double tax treaty. However, where a double tax treaty is in place, the provisions of that treaty will be applied.

Atherstone & Cook

Praetor House
119 Josiah Chinamano Avenue
Corner J Chinamano Avenue & Simon Muzenda Avenue

+263 8677044999

+263 242 705 180
Author Business Card

Law and Practice


Atherstone & Cook has provided legal services in Harare, Zimbabwe, for more than 60 years, during which time it has served clients promptly, efficiently and authoritatively. It has built a reputation for providing solid advice that has subsequently been upheld by the courts. The firm has tended to concentrate on commercial work, including advising firms wishing to invest in Zimbabwe. It has considerable experience in this area, including specialising in the tax regime, exchange control restraints, indigenisation requirements and generally all local laws affecting investment in Zimbabwe. The firm has acted for all four recognised leading accounting firms, many of the major banks, leading commercial firms, many firms listed on the Zimbabwe Stock Exchange, numerous external legal firms in South Africa and leading solicitor firms in England, the United States, Asia and Europe.

Compare law and practice by selecting locations and topic(s)


Select Topic(s)

loading ...

Please select at least one chapter and one topic to use the compare functionality.