ZIMBABWE

TAXATION SYSTEM

(e) Others

Capital Gains Tax

Capital Gains Tax is raised on gains from a Zimbabwean source made on the sale of immovable property and marketable securities. Transactions which are subject to Income Tax are excluded from the scope of Capital Gains Tax, thereby eliminating the possibility of double taxation. There is no provision for setting off capital losses against taxable income, and vice versa.

Rates of Capital Gains Tax

Capital gains are generally taxed at a flat rate of 20%. However gains arising from the sale of a marketable security listed on the ZSE will be taxed at 10%, as will the gain on the disposal of the principal private residence of a person over the age of 59 years.

Exemptions from capital Gains Tax include

• Sale of stocks and bonds in respect of loans to the State, State-owned Company, local authority or statutory corporation.
• Realization by an executor of specified assets forming part of a deceased estate.
• Sales of Zimbabwean assets by life insurers.

Deductions include

• Cost of acquisition of assets sold.
• Cost of additions, alterations or improvement to assets, sold.
• An annual allowance of 15% on the above-mentioned costs.
• Selling expenses such as legal fees, conveyance fees, brokerage, advertising, etc.

Transfers where no tax is payable

Subject to the provision that the taxpayer makes an election before the end of the year of assessment in which the transfer takes place, the capital gains tax liability may be postponed until the date the property is sold to a third party. Such transfers include:

• Transfer of specified assets within groups of companies.
• Transfer of specified assets between spouses.
• Transfer of business property of an individual to a company under his control.