Capital gains withholding tax (CGWT) is the mechanism by which Zimbabwe collects capital gains tax at the moment a specified asset is sold, before the seller has spent the proceeds. It is not a separate tax — it is an advance collection of the very capital gains tax (CGT) charged under Section 6 of the Capital Gains Tax Act [Chapter 23:01], credited back to the seller under Section 22J when the final CGT is computed. This lesson explains the withholding tax itself: what triggers it, the rates, the currency rules, when it is final versus provisional, and how it is set off against the seller's final CGT. Its companion lesson, Role of Intermediaries and Depositaries, explains who must withhold (the depositary→agent→payee cascade of Part IIIA, Sections 22A–22L); this lesson concentrates on the tax that flows through them.

The charge is created by Section 22B of the CGT Act, which levies a "capital gains withholding tax calculated in accordance with the Finance Act [Chapter 23:04]." The rates live in Section 39 of the Finance Act: 1% of the sale price on a listed marketable security — and that 1% is the FINAL tax; 5% of the price on an unlisted/other marketable security (provisional); and, for immovable property acquired after 22 February 2019, a provisional withholding that is later trued-up to the final 20% of the capital gain. The reduction of the listed-security rate from 2% to 1% was made by the Finance Act 7 of 2024 with effect from 28 December 2024.

The relationship between the withholding rate (Finance Act Section 39) and the final CGT rate (Finance Act Section 38) is the heart of the topic. The final CGT is 5% of the gross capital amount where the asset was acquired before 22 February 2019, and 20% of the capital gain where it was acquired after that date. The withholding is calibrated to approximate, but rarely exactly equal, that final figure — which is why most withholdings are provisional and reconciled on the CGT 1 return, with the Section 22J credit producing either a top-up payment or a refund. The single great exception is the listed-security 1%, which the Finance Act expressly declares to be final — no return, no reconciliation, no refund.

Three structural features complete the picture. First, currency: under Section 39A of the Finance Act, CGT (and therefore CGWT) is paid in the currency in which the gain accrued — foreign-currency gains taxed in foreign currency at the Section 38(b)/(9)(b) rate, Zimbabwe-dollar gains in Zimbabwe dollars at the Section 38(a)/(9)(a) rate — and a sale "purported" to be in Zimbabwe dollars is presumed to be in USD at market value unless the seller proves otherwise (Section 39A(11)). Second, the deduction rules differ by currency and acquisition date: for foreign-currency gains, Section 39A(9a) allows only the Section 11(2)(a),(b),(d),(e),(f),(g) deductions plus a 2½%-per-year allowance in lieu of the CPI inflation allowance, and Section 39A(10) denies all Section 11 deductions for assets acquired between 1 February 2009 and 22 February 2019. Third, finality and credit: CGWT is generally provisional and creditable (Section 22J), refundable if over-withheld (Section 22I, 6-year claim, 60-day interest under SI 211/2022), except where the Finance Act makes it final.

This lesson builds on Capital Gains Tax in Zimbabwe: Introduction, Purpose and Legal… (the Section 8(1) three-amount funnel and the 22 February 2019 threshold), Role of Intermediaries and Depositaries (the collection cascade and the Section 30A transfer gate), CGT on Shares and Securities (the listed/unlisted/VFEX share treatment), and How to Calculate Capital Gains Tax (Step-by-Step) (the Section 38 rate structure, treated in depth next). It is the bridge between who collects and how much the seller finally pays.

Capital gains tax has a structural weakness that every revenue authority must solve: it falls due on a one-off event — the sale of an asset — that may be the only taxable transaction the seller has all year, or even all decade. The person selling a single house may never have filed a CGT return before and may never file one again. Once the sale completes and the proceeds are paid out, the seller may emigrate, dissolve, die, or simply spend the money and decline to file. Unlike income tax on a salary (collected steadily through PAYE) or VAT (collected on a recurring two-monthly cycle), CGT has no natural rhythm to hook into. It is, by nature, episodic and easy to evade after the fact.

Zimbabwe's answer is capital gains withholding tax. The idea is simple and powerful: rather than wait for the seller to come forward and pay, the State takes its share out of the sale proceeds as they pass through, at the very moment the transaction is being processed. Because Zimbabwean property and share sales almost always run through a professional intermediary holding the price (a conveyancer's trust account, a stockbroker's settlement, the Sheriff's office), there is a convenient point of interception. The withholding tax is collected there and remitted to ZIMRA, and only the net proceeds reach the seller. The seller then reconciles: if the withholding was more than the true CGT, the excess is refunded; if less, the seller tops up.

It is essential to grasp from the outset that CGWT is not an additional tax on top of CGT. It is the same tax, collected earlier. The legal proof of this is Section 22J of the CGT Act, which allows the CGWT as a credit against the capital gains tax chargeable, refunding any excess. Conceptually, CGWT stands to CGT exactly as PAYE stands to a salaried employee's income tax (studied in Withholding Taxes — Residents and Non-Residents): an instalment-style advance, settled against the final liability. A taxpayer who treats the withholding as "extra" will wrongly believe they are being double-taxed; a taxpayer who treats a provisional withholding as "final" will either forfeit a refund or, worse, fail to top up an under-collection and face additional tax.

There is one genuine point of finality, and the candidate must hold it firmly: the 1% withholding on the sale of a listed marketable security is, by the express words of the Finance Act, the final tax. For ZSE-listed shares, the broker'Section 1% deduction ends the matter — there is no CGT 1, no reconciliation, no refund. This single-rate, final-tax design for listed securities is a deliberate simplification: the volume of listed-share trades is enormous, the gains are hard to compute trade-by-trade (cost bases, splits, rights issues), and a flat 1%-of-price final tax is administratively far cheaper than gain-by-gain assessment.

Why is this topic so heavily examined and so audited? Because CGWT is where the money actually moves. ZIMRA's revenue from capital gains depends overwhelmingly on the withholding system functioning — on intermediaries deducting the right amount, in the right currency, and remitting it on time. Errors here are errors with cash attached: an under-withholding is lost revenue; an over-withholding is a refund obligation with interest. For the seller, getting the withholding/credit reconciliation wrong is the difference between a refund and an unexpected additional assessment. The currency rules (Section 39A) add a further layer of audit risk that simply did not exist before 2019.

Section 22B — the charge to capital gains withholding tax

The withholding tax is created by Section 22B of the Capital Gains Tax Act [Chapter 23:01], the charging provision of Part IIIA: "There shall be charged, levied and collected throughout Zimbabwe in accordance with this Part, for the benefit of the Consolidated Revenue Fund, a capital gains withholding tax calculated in accordance with the Finance Act [Chapter 23:04]." This is the now-familiar two-statute design of Capital Gains Tax in Zimbabwe: Introduction, Purpose and Legal…: the CGT Act creates and structures the withholding tax; the Finance Act fixes the rate. Section 22B levies the tax; Sections 22C–22E (covered in Role of Intermediaries and Depositaries) say who must withhold it and when; Section 39 of the Finance Act says how much.

Section 39 of the Finance Act — the rates of CGWT

Section 39 ("Rates of capital gains withholding tax") sets the rates chargeable under Part IIIA:

• Paragraph (a) — listed marketable security: 1% of the sale price, and "the amount so withheld shall be considered to be the final tax." The history is instructive and shows how volatile this figure has been: the rate was substituted at 1% by the Finance Act 8 of 2022 (w.e.f. 13 May 2022); temporarily set at 2% (final) by SI 110/2024 for six months from 28 June 2024 and validated by the Finance Act 2024; then reduced from 2% back to 1% by the Finance Act 7 of 2024 with effect from 28 December 2024. The current rate is 1%, final.
• Paragraph (b) — immovable property acquired after 22 February 2019: a provisional withholding "subject to a final assessment rate" of 20% of the capital gain. The drafting of paragraph (b) is internally inconsistent in the source and must be treated with care (see the VERIFY note below).
• Paragraph (c) — has a troubled legislative history: substituted by the Finance Act 7/2021, then by SI 96/2022 (which the source states was ultra vires the Minister's powers), repealed for six months by SI 110/2024, and validated by Section 14(b) of the Finance Act 2024. Its current operative content should be confirmed against the consolidated Act.
• Paragraph (d) — marketable security other than a listed security: 5% of the sale price (substituted by the Finance Act 8 of 2022 w.e.f. 13 May 2022; validated by the Finance Act 2024). This is the provisional withholding on unlisted shares and similar securities.

Section 38 of the Finance Act — the FINAL CGT rate the withholding anticipates

The withholding only makes sense against the final CGT rate it is collecting in advance. Section 38 provides that CGT chargeable under Section 6 of the CGT Act is:

• (a) in respect of a specified asset acquired before 22 February 2019: 5 cents for each dollar (5%) of the gross capital amount — i.e. 5% of the gross proceeds, with no deductions (the "gross" basis); applied in the Zimbabwe-dollar case under Section 39A(9)(a) and the USD case under Section 39A(9)(b);
• (b) in respect of a specified asset acquired after 22 February 2019: 20 cents for each dollar (20%) of the capital gain — i.e. 20% of the net gain after deductions.

The 22 February 2019 threshold (set by the Finance Act 7 of 2021, backdated, replacing the earlier 21 August 2019 and 1 February 2009 dates) is keyed to the acquisition date, not the sale date, exactly as established in Capital Gains Tax in Zimbabwe: Introduction, Purpose and Legal…. This dual structure — 5%-of-gross for old assets, 20%-of-gain for new assets — is the reason the withholding system has different rates and bases for different transactions.

Section 39A of the Finance Act — currency and deductions

Section 39A ("Payment of capital gains tax in foreign currency in certain circumstances", inserted by Act 3 of 2009) governs the currency in which CGT/CGWT is paid and, critically, restricts deductions:

• Subsections (1)–(2): where capital gains accrue in foreign currency, the tax is paid in that foreign currency on the foreign-currency portion; where partly in each currency, the tax on each part is computed separately under Sections 38 and 39 and paid in the matching currency.
• Subsection (5): the Commissioner may require payment in US dollars (converted at the international cross-rate) where a different foreign currency is tendered.
• Subsection (9) (substituted by the Finance (No.2) Act 7/2019): despite the legal-tender provisions, CGT transactions are not deemed to be in Zimbabwe dollars; rather, (a) Zimbabwe-dollar gains are taxed at the Section 38(a) rate in Zimbabwe dollars, and (b) foreign-currency gains at the Section 38(b) rate in foreign currency.
• Subsection (9a) (inserted by the Finance Act 7/2021, backdated to 22 February 2019): for foreign-currency gains, no Section 11 deductions are allowed except those in Section 11(2)(a), (b), (d), (e), (f) and (g) plus, in lieu of the CPI inflation allowance, 2½% of the purchase price per year (or part-year) from acquisition to sale, and 2½% of the cost of additions/improvements per year — with Zimbabwe-dollar expenditure converted to USD by a Ministerial formula. This is the USD "2.5% allowance in lieu of CPI" noted in CGT on Shares and Securities.
• Subsection (10) (inserted by the Finance (No.2) Act 7/2019): for a specified asset acquired on or after 1 February 2009 but before 22 February 2019 and disposed of after that date, no Section 11 deductions at all are allowed. This "deduction blackout window" is a major trap.
• Subsection (11) (inserted by the Finance (No.3) Act 13/2019): a sale purported to be in Zimbabwe dollars is presumed to have been in USD at market value, with CGT payable in USD, unless the seller proves to the Commissioner's satisfaction that the asset was genuinely sold for Zimbabwe dollars. This anti-avoidance presumption stops sellers re-denominating USD sales as ZWL to access the (often more favourable) Zimbabwe-dollar treatment.

The reconciliation provisions — Sections 22J, 22I, 22H of the CGT Act

Three CGT Act provisions complete the withholding-tax mechanism and are explained in detail in Role of Intermediaries and Depositaries; here we note their role in the tax:

• Section 22J — credit: the CGWT paid is credited against the final CGT, with any excess refunded. This is what makes a provisional withholding genuinely provisional.
• Section 22I — refund of overpayments: over-withheld CGWT is refundable on a claim made within 6 years, with interest if not refunded within 60 days (SI 211/2022).
• Section 22H — penalty: failure to withhold/remit attracts the 15% penalty and personal liability (on the collector, not the seller).

Provisional vs final — the single most important distinction

Every CGWT a candidate meets is either final or provisional, and everything else follows from which it is.

A final withholding ends the seller's CGT obligation for that transaction. The seller does not file a CGT 1 for it, does not compute a gain, and cannot claim a refund if the withholding happened to exceed what a gain-based computation would have produced. In Zimbabwe the only final CGWT in general operation is the 1% on listed marketable securities (Finance Act Section 39(a), "considered to be the final tax"). The logic is administrative: listed-share gains are high-volume and computationally awkward, so the law accepts a rough-justice flat 1% of price as the whole tax.

A provisional withholding is merely a down-payment on a CGT liability that must still be finally computed. The 5%-on-price unlisted-security withholding (Section 39(d)) and the immovable-property withholding (Section 39(b)) are provisional. The seller files the CGT 1, computes the final CGT (5% of gross for pre-22 Feb 2019 assets, or 20% of the gain for post-22 Feb 2019 assets), and then credits the withholding (Section 22J): if the final CGT exceeds the withholding, the seller pays the difference; if the withholding exceeds the final CGT, the seller is refunded the excess (Section 22J / Section 22I).

The mistake to avoid — and a classic exam trap — is treating a provisional withholding as final. A seller of unlisted shares who assumes "the broker took 5%, so I'm done" may in fact owe more (if 20%-of-gain exceeds 5%-of-price) or be owed a refund (if the gain was small). Only the listed-security 1% is genuinely "done."

Why the rate (Section 39) and the final tax (Section 38) differ — and must be reconciled

The withholding rate is not the same number as the final CGT rate, and it is not meant to be. The withholding is a proxy collected quickly at the point of sale, deliberately set as a percentage of the easily-known sale price, whereas the final CGT (for post-2019 assets) is a percentage of the capital gain, which can only be computed after assembling cost, improvements, selling expenses and the inflation/2.5% allowance. Because price and gain are different bases, the withholding can over- or under-collect:

• On a high-gain sale (asset bought cheap, sold dear), 20%-of-gain may exceed a 5%-of-price provisional withholding → the seller tops up.
• On a low-gain sale (asset bought dear, sold only slightly higher), 20%-of-gain may be less than a 5%-of-price withholding → the seller is refunded.
• On a loss-making sale, there is no gain and therefore no final CGT, so the entire provisional withholding is refundable (and the seller should consider a clearance certificate under Section 22C(5) to avoid the withholding in the first place).

The credit under Section 22J is the gear that meshes the two rates together. It is the conceptual heart of the system: withhold a rough amount on price now, compute the exact amount on gain later, settle the difference.

The currency overlay (Section 39A) — a tax computed and paid in the currency of the gain

Since 2019, Zimbabwe has had a multi-currency reality, and Section 39A bolts a currency rule onto the whole CGT/CGWT machine. The governing principle is "tax follows the currency of the gain": a gain received in USD is taxed in USD at the Section 38(b)/(9)(b) rate; a gain received in Zimbabwe dollars is taxed in Zimbabwe dollars at the Section 38(a)/(9)(a) rate; a mixed-currency gain is split and each part taxed and paid in its own currency (Section 39A(2)). The intermediary must therefore withhold in the currency the buyer paid.

Layered on top are two deduction rules that change the base of the tax depending on currency and acquisition date:

1. Foreign-currency gains (Section 39A(9a)): only the Section 11(2)(a),(b),(d),(e),(f),(g) deductions are allowed, plus a 2½%-per-year allowance in lieu of the CPI inflation allowance. The ordinary CPI inflation allowance in Section 11(2)(c) is replaced by this flat 2.5%/year of cost for USD computations. This is why USD CGT computations look different from ZWL ones.
2. Assets acquired 1 Feb 2009 – 22 Feb 2019 (Section 39A(10)): no Section 11 deductions at all. An asset bought in, say, 2015 and sold in 2026 gets no cost deduction, no improvements, no inflation allowance — the gain is effectively the full proceeds. This blackout window is a severe trap and dramatically increases the effective tax on assets from that period.

Finally, the Section 39A(11) presumption treats a "purported" Zimbabwe-dollar sale as a USD sale at market value unless the seller proves otherwise — closing the door on re-denominating USD deals as ZWL to dodge the foreign-currency rules.

Old law versus new law — how the withholding regime reached its present shape

A defining feature of TAXTAMI lessons is the old-versus-new contrast, and CGWT has been amended more often than almost any other corner of the CGT system. The candidate should understand not just the current rates but how they got here, because transitional disputes and legacy assessments still turn on the earlier rules.

The listed-security rate. The withholding on listed marketable securities has oscillated repeatedly. It was substituted at 1% by the Finance Act 8 of 2022 (with effect from 13 May 2022); then temporarily raised to 2% (final) by SI 110/2024 for a six-month period from 28 June 2024 (an instrument the source notes was issued under contested authority but later validated by Section 14(a) of the Finance Act 2024); and finally reduced back to 1% by the Finance Act 7 of 2024 with effect from 28 December 2024. The "for the avoidance of doubt" explanatory note in the source confirms the 2% final-tax window was deliberate and time-limited. The practical lesson: a listed-share disposal must be taxed at the rate in force on the date of the transaction, so a 2024 trade in the mid-year window may carry a different rate from one in early 2025.

The acquisition-date threshold. The pivotal date that splits the 5%-of-gross regime from the 20%-of-gain regime has itself moved. The original split (under Act 5 of 2009) used 1 February 2009. The Finance (No.2) Act 7 of 2019 introduced 21 August 2019. The Finance Act 7 of 2021, gazetted 31 December 2021, then substituted 22 February 2019 and backdated it. The current, confirmed threshold is 22 February 2019. Lessons or notes still citing 1 February 2009 as the rate-split date are out of date — though that date survives in a different role as the start of the Section 39A(10) deduction-blackout window (1 Feb 2009 to 22 Feb 2019).

The currency rules. Before 2019 the system was effectively single-currency. The multi-currency overlay in Section 39A(9)–(11) is a post-2019 construction: Section 39A(9) (substituted by the Finance (No.2) Act 7/2019) split the ZWL and foreign-currency cases; Section 39A(9a) (Finance Act 7/2021, backdated to 22 February 2019) created the 2½%-in-lieu-of-CPI allowance for USD gains; Section 39A(10) (Finance (No.2) Act 7/2019) created the deduction blackout for 2009–2019 assets; and Section 39A(11) (Finance (No.3) Act 13/2019) added the purported-ZWL-sale presumption. A pre-2019 disposal simply did not face any of this; a post-2019 disposal faces all of it. This is why the date of disposal and the date of acquisition together dictate which version of the law applies.

A clean worked template

For any disposal, the CGWT analysis proceeds:

1. Is it a specified asset? (If not, no CGT/CGWT — see Specified Assets Under Zimbabwe Capital Gains Tax Law.)
2. Is the gain exempt under Section 10? (If yes, no withholding — Section 22F(a).)
3. What currency did the gain accrue in? (Determines the rate column and deduction rules — Section 39A.)
4. When was the asset acquired? (Before 22 Feb 2019 → 5%-of-gross final rate; after → 20%-of-gain; 1 Feb 2009–22 Feb 2019 → no deductions, Section 39A(10).)
5. What is the withholding? (Listed security 1% final; unlisted 5% provisional; immovable provisional → final 20% of gain.)
6. Reconcile (Section 22J): credit the withholding against the final CGT; pay the difference or claim the refund (unless the withholding was final).

Individuals — listed shares (final) vs unlisted shares (provisional)

Farai sells ZSE-listed shares for USD 50,000 through her broker. Under Finance Act Section 39(a) the broker withholds 1% × USD 50,000 = USD 500, and that is the final tax. Farai files nothing further for this trade and gets no refund — the 1% is the whole story.

Contrast Farai's sale of unlisted shares in a private company for USD 50,000, acquired in 2021 for USD 20,000:

Withholding (provisional), Section 39(d): 5% x USD 50,000 = USD 2,500
--- later, on the CGT 1 ---
Sale price USD 50,000
Less: cost (Section 11(2)(a)) USD 20,000
Less: 2.5%/yr in lieu of CPI (Section 39A(9a)): 2.5% x 20,000 x ~5 yrs ~ USD 2,500
 ----------
Capital gain (approx.) USD 27,500
Final CGT @ 20% (post-2019) USD 5,500
Less: Section 22J credit (withholding) (USD 2,500)
 ----------
Top-up payable USD 3,000

The unlisted withholding was provisional; Farai must top up USD 3,000 because 20%-of-gain exceeded the 5%-of-price withholding. (Figures for the 2.5% allowance are illustrative and depend on the exact part-years and Ministerial conversion formula.)

Individuals — immovable property, and the deduction-blackout trap

Nyasha sells a cottage for USD 80,000. Case 1: he bought it in 2022 for USD 60,000 with USD 4,000 of costs. The conveyancer withholds the immovable-property provisional CGWT and remits it; on the CGT 1 the final CGT is 20% × (80,000 − 60,000 − 4,000 − 2.5% allowance) ≈ 20% × ~USD 13,000 ≈ USD 2,600, against which the withholding is credited (Section 22J). Case 2 (the trap): he bought it in 2015 (i.e. within the 1 Feb 2009 – 22 Feb 2019 window) for USD 60,000. By Section 39A(10) no deductions are allowed at all — not the USD 60,000 cost, not the improvements, not any allowance. The "gain" is effectively the full USD 80,000, and the final CGT is 20% × USD 80,000 = USD 16,000. The acquisition window, not the economics of the deal, drives a six-fold difference in tax. This is the single most important practical point in the currency rules.

SMEs and partnerships — currency splitting and clearance planning

Highveld Trading (Pvt) Ltd sells a warehouse for a price paid 40% in ZWL and 60% in USD. Under Section 39A(2) the CGT/CGWT on each portion is computed and paid separately in the matching currency — the ZWL portion at the Section 38(a)/(9)(a) rate in ZWL, the USD portion at the Section 38(b)/(9)(b) rate in USD. The conveyancer must withhold in both currencies. Where Highveld can show the final CGT will be lower than the provisional withholding (e.g. heavy allowable improvements), it should apply for a clearance certificate (Section 22C(5)) to avoid locking up working capital pending a Section 22J refund — the legitimate cash-flow tool introduced in Role of Intermediaries and Depositaries.

SMEs — the refund position when a sale makes a loss

Mbare Spares (Pvt) Ltd sells an unlisted shareholding for USD 30,000 that it acquired in 2021 for USD 38,000 — an economic loss. The broker/financial institution nonetheless withholds the provisional 5% × USD 30,000 = USD 1,500 (Section 39(d)), because the withholding is computed on price, not gain, and the collector cannot know the cost base. On the CGT 1 the company computes its position: proceeds USD 30,000 less cost USD 38,000 = a capital loss, so the final CGT is nil. The entire USD 1,500 withheld is refundable under Section 22J (excess credit) and Section 22I (refund of overpayment), with interest if ZIMRA does not pay within 60 days (SI 211/2022). The better practice, known in advance, would have been to apply for a clearance certificate (Section 22C(5)) so that no withholding occurred at all and the USD 1,500 was never locked up. This scenario crystallises why a provisional withholding on price can over-collect badly on low- or negative-gain disposals, and why the Section 22J/Section 22I refund route — and the clearance certificate — exist.

Large corporates and multinationals — final-tax efficiency and reconciliation discipline

A fund actively trading listed securities benefits enormously from the 1% final regime: every disposal is settled at 1% of price by the broker, with no gain computation and no return per trade — a major compliance saving relative to gain-by-gain assessment. For unlisted holdings and immovable assets, the corporate must run the full Section 22J reconciliation on each disposal, tracking provisional withholdings as prepaid tax assets and claiming refunds (Section 22I, with interest) where 20%-of-gain falls below the withholding. Multinationals must also watch the Section 39A(11) presumption: a cross-border deal documented in ZWL will be presumed USD at market value unless genuinely ZWL-denominated and proven so.

Law Society of Zimbabwe and Mollat P.M. v Minister of Finance (AG intervening), 99-SC-092 (Supreme Court). The foundational authority for the withholding regime. It upheld the constitutionality of collecting capital gains tax through withholding and conditioning the release of funds on clearance certificates, while confirming the limits — the pre-amendment 1998 charging provision was held ultra vires Section 16 of the Constitution for the gap period (1 January–7 July 1999). For CGWT specifically, the case confirms that the State may lawfully take its tax out of sale proceeds at source, provided the charge is properly enacted.

Sabeta M v Commissioner-General, ZIMRA, 12-HH-079 (High Court). Once the capital gains tax has been paid, ZIMRA must assess and issue the certificate that permits transfer. For the withholding system this is the taxpayer-protective counterpart to collection: the withholding/transfer machinery compels payment but cannot be used to withhold a certificate from a seller who has paid — directly relevant to the Section 30A transfer gate and the seller's entitlement to proceed once the CGWT (and any top-up) is settled.

Sommer Ranching (Pvt) Ltd v Commissioner of Taxes, 99-SC-065 (Supreme Court). Illustrates the mutatis mutandis importation of the Taxes Act machinery (CGT Act Sections 23–24) into CGT, which underlies the assessment and refund processes through which a provisional CGWT is reconciled to final CGT.

A note on the limits of the authority. The detailed rate and currency mechanics of CGWT (Finance Act Sections 38, 39, 39A) are recent and frequently amended by statute and statutory instrument; they are governed by the legislation itself rather than by a body of case law, and several of the rate instruments (e.g. SI 96/2022) were noted in the source as having been challenged as ultra vires the Minister's powers — echoing the levy-rate-belongs-to-Parliament principle established for income-tax levies in Other Income-Based Levies (IMTT, Carbon Tax, etc.) (e.g. Mlilo 19-HH-605). Where this lesson states a rate, it is taken from the 27 May 2025 Finance Act source; the immovable-property provisional rate is flagged for verification because the source is internally inconsistent.

1. Treating a provisional withholding as final. Only the 1% on listed securities is final (Section 39(a)). The 5%-on-price unlisted withholding and the immovable-property withholding are provisional and must be reconciled on the CGT 1 under Section 22J — top up or claim a refund.

2. Forgetting the Section 39A(10) deduction blackout. Assets acquired 1 Feb 2009 – 22 Feb 2019 and sold later get no Section 11 deductions at all — the tax is effectively 20% of the full proceeds. Practitioners who deduct cost on such assets badly understate the tax.

3. Using the CPI inflation allowance for USD gains. For foreign-currency gains, Section 39A(9a) replaces the CPI allowance with a flat 2½% per year of cost (and of improvements). Applying the ZWL CPI inflation allowance to a USD computation is wrong.

4. Withholding in the wrong currency. Under Section 39A the tax is paid in the currency the gain accrued in, split where mixed (Section 39A(2)). Converting a USD gain to ZWL (or vice versa) to withhold misstates the tax and the currency of remittance.

5. Re-denominating a USD sale as ZWL. The Section 39A(11) presumption treats a "purported" ZWL sale as USD at market value unless the seller proves genuine ZWL denomination. Documenting a USD deal in ZWL to access ZWL treatment will be reversed.

6. Confusing the withholding rate (Section 39) with the final CGT rate (Section 38). The withholding (1%/5%/immovable-provisional) is a proxy on price; the final CGT is 5% of gross (pre-2019) or 20% of gain (post-2019). They are different numbers on different bases and must be reconciled, not equated.

7. Missing a refund by not filing. Where the provisional withholding exceeds the final CGT (low gain or loss), the excess is refundable under Section 22J/Section 22I — but only if the seller files and claims. The 6-year limit (Section 22I) and 60-day interest (SI 211/2022) apply.

8. Assuming VFEX-listed securities are withheld. VFEX-listed securities are fully exempt (Act 8/2020, see CGT on Shares and Securities), so no CGWT is withheld (Section 22F(a)) — distinct from the 1% final on ZSE-listed securities.

Work through the questions one at a time. Choose an answer and it is graded immediately, with an explanation and the provision it comes from. Your progress is saved, so you can stop and resume.

• CGWT is an advance, not an extra tax: created by CGT Act Section 22B, collected at the point of sale, and credited against final CGT under Section 22J with any excess refunded (Section 22I; 6-year claim; 60-day interest, SI 211/2022).
• Rates (Finance Act Section 39): listed security 1% of price = FINAL (cut from 2% by FA 7/2024 w.e.f. 28 Dec 2024); unlisted/other security 5% of price = provisional; immovable property post-22 Feb 2019 = provisional, trued to final 20% of gain — .
• Final CGT (Finance Act Section 38): 5% of the gross capital amount for assets acquired before 22 Feb 2019; 20% of the capital gain for assets acquired after — the threshold is keyed to the acquisition date, not the sale date.
• Provisional vs final is the master distinction: only the listed-security 1% ends the matter; everything else is reconciled on the CGT 1 via the Section 22J credit (top up or refund).
• Currency follows the gain (Section 39A): USD gains taxed/remitted in USD, ZWL gains in ZWL, mixed gains split (Section 39A(2)); a "purported" ZWL sale is presumed USD at market value unless proven (Section 39A(11)).
• Deduction overlays: foreign-currency gains get only Section 11(2)(a),(b),(d),(e),(f),(g) plus a 2½%-per-year allowance in lieu of CPI (Section 39A(9a)); assets acquired 1 Feb 2009 – 22 Feb 2019 get NO deductions at all (Section 39A(10)) — the harshest trap in the regime.
• The withholding rate (price-based proxy) and the final CGT rate (gain-based) are deliberately different and must be reconciled, never equated.
• VFEX-listed securities are exempt (Act 8/2020) → no withholding (Section 22F(a)); ZSE-listed attract the 1% final — do not confuse the two.
• Enforcement falls on the collector (15% penalty, personal liability, Section 22H — see Role of Intermediaries and Depositaries), while the transfer gate (Section 30A) ensures the tax is settled before title passes; per Sabeta M ZIMRA must issue the certificate once paid.
• Policy insight: CGWT converts an episodic, easily-evaded one-off tax into a reliably collected source levy — trading perfect accuracy (rough 1%/5%-of-price proxies) for collection certainty, then restoring accuracy through the Section 22J reconciliation for all but the final-taxed listed securities.

Table 1 — Withholding rate vs final CGT, by asset and acquisition date

Table 2 — Currency and deduction rules (Section 39A)

Diagram — From sale to settled CGT via withholding

flowchart TD
 A[Sale of a specified asset] --> B{Exempt under Section 10?}
 B -->|Yes| C[No withholding - Section 22F a]
 B -->|No| D{What type of asset?}
 D -->|Listed security| E[Withhold 1% of price - Section 39 a]
 E --> F[FINAL TAX - no return, no reconciliation]
 D -->|Unlisted security| G[Withhold 5% of price provisionally - Section 39 d]
 D -->|Immovable property| H[Withhold provisional amount - Section 39 b]
 G --> I[File CGT 1 and compute final CGT]
 H --> I
 I --> J{Acquired before 22 Feb 2019?}
 J -->|Yes| K[Final CGT = 5% of gross - Section 38 a]
 J -->|No| L[Final CGT = 20% of gain - Section 38 b]
 K --> M[Credit withholding - Section 22J]
 L --> M
 M --> N{Withholding vs final CGT?}
 N -->|Withholding less| O[Pay the difference]
 N -->|Withholding more| P[Refund the excess - Sections 22J and 22I]

Statutes & sections

• Capital Gains Tax Act [Chapter 23:01]
• Section 22B — charges the capital gains withholding tax, calculated per the Finance Act.
• Section 22C–22E — the withholding cascade (depositary/agent/payee); 3-working-day remittance (detailed in Role of Intermediaries and Depositaries).
• Section 22F — exemptions: gains exempt under Section 10; unit-trust redemption rule.
• Section 22H — 15% penalty and personal liability of the collector for failure to withhold/remit.
• Section 22I — refund of overpaid CGWT (6-year claim; 60-day interest, SI 211/2022).
• Section 22J — credit of CGWT against final CGT; refund of excess (proves CGWT is an advance).
• Section 6 / Section 8(1) — the CGT charge and the gross-capital-amount → capital-amount → capital-gain funnel.
• Section 11 — allowable deductions whose availability is modified by Finance Act Section 39A(9a)/(10).
• Section 30A — transfer gate requiring a ZIMRA CGT-paid certificate before registration.
• Finance Act [Chapter 23:04]
• Section 38 — final CGT rates: 5% of gross capital amount (acquired before 22 Feb 2019) / 20% of capital gain (after).
• Section 39 — CGWT rates: (a) listed security 1% of price (final); (b) immovable property post-22 Feb 2019 (provisional → final 20% of gain; rate inconsistency flagged); (d) other/unlisted security 5% of price.
• Section 39A — payment of CGT/CGWT in foreign currency: currency-of-the-gain rule (1)–(2), USD conversion (5), ZWL/foreign split (9)(a)/(b), 2½%/yr allowance in lieu of CPI and limited deductions (9a), no deductions for 1 Feb 2009–22 Feb 2019 assets (10), purported-ZWL-sale presumed USD (11).

Case law

• Law Society of Zimbabwe and Mollat P.M. v Minister of Finance (AG intervening), 99-SC-092 — constitutionality of withholding/clearance; pre-amendment 1998 charge ultra vires the Constitution for the 1999 gap period.
• Sabeta M v Commissioner-General, ZIMRA, 12-HH-079 — ZIMRA must issue the CGT certificate once tax is paid (taxpayer-protective counterpart to collection).
• Sommer Ranching (Pvt) Ltd v Commissioner of Taxes, 99-SC-065 — mutatis mutandis importation of Taxes Act assessment/refund machinery into CGT.

ZIMRA guidance

• Comprehensive Guide to Form CGT 1 — ZIMRA External Guide — the return on which provisional CGWT is reconciled to final CGT and the Section 22J credit/refund claimed.

Subsidiary legislation

• SI 188/2005 — lifted the Section 22L suspension of securities withholding (17 October 2005).
• SI 110/2024 — temporary 6-month substitution of Section 39 securities/immovable rates (28 June 2024), validated by the Finance Act 2024; the listed-security rate then reduced from 2% to 1% by the Finance Act 7/2024 w.e.f. 28 December 2024.
• SI 211/2022 — current rate of interest on CGT/CGWT overpayments (Section 22I), w.e.f. 1 December 2022.