Other Income-Based Levies in Zimbabwe

A Introduction

In addition to the standard income taxes, Zimbabwe imposes several income-based levies on specific transactions and sectors. These levies are established by the Income Tax Act (often referred to as the Taxes Act) as read with the Finance Act, and they target certain payments or activities.

This lesson provides comprehensive coverage of the following levies and taxes:

Intermediated Money Transfer Tax (IMTT)
Presumptive Taxes
Property or Insurance Commission Tax
Tobacco Levy
Carbon Tax
Bookmakers and Punters Tax
Demutualisation Levy

Each section provides detailed analysis of the legal basis, current rates (as updated to 2025/26), examples of application, and differences in treatment between individuals and companies (including residents vs. non-residents) where relevant.

"These specialized levies represent targeted revenue measures that complement the broader income tax system, ensuring that specific sectors and transactions contribute appropriately to the fiscus while addressing policy objectives such as formalization, environmental protection, and sector-specific regulation."

B Intermediated Money Transfer Tax (IMTT)

Legal Basis

The IMTT was introduced via the Finance Act and is codified in Section 36G of the Income Tax Act, with the operative rate specified in Section 22G of the Finance Act. It is sometimes informally called the "2% tax" and applies to electronic money transfers.

Banks, mobile money providers, and financial institutions are required to collect this tax on transactions and remit it to the Zimbabwe Revenue Authority (ZIMRA).

Current Rates (2026)

IMTT Rate Structure

ZWL Transactions: 1.5% of the transfer amount (reduced from 2% to encourage local currency use)
Foreign Currency Transactions: 2% of the transfer amount
High-Value Cap: Transactions of US$500,000 or more attract a flat IMTT of US$10,150 (approximately 2% of $500k) instead of proportional 2%
Small Transaction Exemption: Transactions below approximately ZWL $500 or USD $5 are exempt

For every dollar transferred electronically, USD $0.02 is payable as IMTT in the case of foreign currency transactions, and ZWL transfers are subject to 1.5% IMTT.

Comprehensive Examples

Example 1: Local Currency Transfer

Scenario: An individual transfers ZWL 100,000 to another account.

IMTT Calculation: ZWL 100,000 × 1.5% = ZWL 1,500

Net Transfer: The recipient receives ZWL 98,500

Example 2: Foreign Currency Transfer

Scenario: A company transfers US$200 to a supplier.

IMTT Calculation: US$200 × 2% = US$4

Net Transfer: The supplier receives US$196

Example 3: High-Value Transfer with Cap

Scenario: A company makes a large payment of US$1,000,000 in a single transfer.

Without Cap: US$1,000,000 × 2% = US$20,000

With Cap Applied: US$10,150 (capped amount)

Savings: US$9,850 due to the cap provision

Rationale: The cap limits the absolute tax payable on high-value transfers, providing relief for large business transactions.

Example 4: Standard Business Transfer

Scenario: A business transfers US$1,000 to pay for inventory.

IMTT Calculation: US$1,000 × 2% = US$20

Tax Deductibility: From 2025 onward, the business can deduct this US$20 as an expense for income tax purposes.

Treatment of Different Taxpayers

The IMTT is transaction-based, and liability does not depend on the taxpayer's status as an individual or company, nor on residency.

Key Characteristics

Universal Application: Both residents and non-residents incur IMTT whenever they transact through Zimbabwean financial systems
Exemptions: Certain transfers are exempt (government transfers, specified humanitarian payments)
Financial Institution Exemption: Banks and mobile money providers are generally exempt when moving their own funds
Tax Deductibility (from 2025): Businesses can deduct IMTT as an expense for income tax purposes

Compliance

There is no direct filing requirement for IMTT by the transacting public. Instead:

Banks and mobile money operators automatically levy the tax at the point of transaction
Financial intermediaries remit collected IMTT to ZIMRA on a daily or periodic basis as prescribed
Taxpayers should factor IMTT into transaction costs
If IMTT is under-collected, ZIMRA can recover it from the financial intermediary or, less commonly, from the transacting parties

Summary: IMTT is a broad-based levy on electronic money movements, set at 1.5% for local currency and 2% for foreign currency transactions, with a high-value cap, and it is administered via financial intermediaries rather than through taxpayer-filed returns.

C Presumptive Taxes

Legal Basis

Presumptive taxes in Zimbabwe are provided for in Section 36C of the Income Tax Act, and the rates/amounts are defined in Section 22C of the Finance Act.

Presumptive tax is a simplified tax regime targeting the informal sector and certain small-scale business activities that may not be registered for standard income tax. The Finance Act (No.2) 2005 introduced these taxes, and they have been updated several times (most recently by the Finance Act 2024) to adjust rates and categories.

Purpose of Presumptive Taxes

The presumptive tax serves as a substitute for income tax for targeted activities – it is usually a fixed amount or percentage that approximates tax on income, applied in lieu of requiring detailed accounting of actual income and expenses.

Applicable Rates and Categories (2025/26)

Presumptive tax rates vary by the type of trade or asset. The current rates (denominated in USD for reference, but payable in ZWL at the prevailing rate) for key categories are as follows:

Category	Rate/Amount	Basis
Informal Traders (General)	10% of monthly rental	Premises/stall rental amount
Small-Scale Miners	0% (Exempt)	Reduced to zero to encourage official deliveries
Taxicab (up to 7 passengers)	US$35 per month	Per vehicle
Minibus (8-14 seats)	US$50 per month	Per vehicle
Minibus (15-24 seats)	US$60 per month	Per vehicle
Bus (25-36 seats)	US$80 per month	Per vehicle
Large Bus (over 36 passengers)	US$100 per month	Per vehicle
Heavy Trucks (over 10 tonnes)	US$200 per month	Per vehicle
Heavy Combinations (over 20 tonnes)	Up to US$500 per month	Per vehicle (large haulage trucks)
Driving Schools (Class 4 only)	US$50 per month	Light vehicle training
Driving Schools (Class 1 & 2)	US$100 per month	Heavy vehicle training
Hairdressing Salons	US$5 per chair per month	Per station/chair
Informal Cross-Border Traders	20% of value for duty	Commercial goods imported
Restaurants/Bottle Stores (unlicensed)	US$35 per month	Small eateries/bars
Cottage Industry Operators	US$100 per month	Small manufacturers/artisans
Beauty Parlors/Spas	US$100 per month	Per establishment
Gymnasiums	US$100 per month	Per establishment
Butcheries (small)	US$50 per month	Small butcher shops
Commercial Boats	US$30-US$100 per month	Depending on vessel size

Note: The above USD amounts are converted to ZWL at the official exchange rate when payment is made. The law often pegs them in USD to maintain value, given local inflation. ZIMRA publishes the ZWL equivalents periodically.

Comprehensive Examples

Example 1: Market Vendor

Scenario: A market vendor rents a stall for $200 per month at Mupedzanhamo market.

Presumptive Tax: $200 × 10% = $20 per month

Annual Tax: $20 × 12 = $240 per year

Note: This tax is payable regardless of actual profits earned.

Example 2: Driving School Operator

Scenario: An individual operates an unregistered driving school teaching only class 4 drivers.

Monthly Presumptive Tax: US$50

Annual Tax: US$50 × 12 = US$600

Note: No matter if the school makes $500 or $5,000 per month in revenue, the tax is fixed at $50 monthly.

Example 3: Commuter Omnibus

Scenario: A taxpayer runs a small commuter bus (18-seater).

Monthly Presumptive Tax: US$60 (15-24 seater category)

Annual Tax: US$60 × 12 = US$720

Note: The fixed amount simplifies compliance for small operators and ensures a minimum tax contribution.

Example 4: Hairdressing Salon

Scenario: A small salon with 4 chairs/stations.

Monthly Presumptive Tax: 4 chairs × US$5 = US$20

Annual Tax: US$20 × 12 = US$240

Individuals vs Companies & Exemptions

Presumptive taxes are generally intended for informal sector individuals or entities that are not registered for normal income tax.

Key Principles

Target Group: Informal sector operators without Income Tax clearance
Tax Clearance Exemption: Tax-compliant businesses with a valid tax clearance (ITF 263) are usually exempt from presumptive tax
Backstop Function: The presumptive regime captures revenue from those outside the formal tax net
Professional Phase-Out: Self-employed professionals (doctors, lawyers, engineers) were phased out of presumptive tax by 1 January 2025 and must now file normal income tax returns

Compliance and Filing

Payment of presumptive taxes is often collected at source or upon periodic licensing:

Vehicle Operators: Pay when renewing vehicle licenses
Cross-Border Traders: Pay at borders when importing goods
Informal Traders: Local authorities may coordinate collection with rent payments
No Complex Filing: The tax is simply a set amount without need for annual returns
Quarterly or Monthly Payment: As prescribed for each category

Summary: Presumptive taxes provide a simplified, fixed approach to taxing small-scale businesses, ensuring contribution to the fiscus with minimal administrative burden.

D Property or Insurance Commission Tax

Legal Basis

A special withholding tax on commissions is imposed by Section 36I of the Income Tax Act, with the rate set by Section 22I of the Finance Act.

This tax applies to certain commission payments, specifically in the insurance and property sectors. It was introduced to bring freelance agents and brokers into the tax net. The law requires the payer of the commission to withhold a percentage as tax and remit it to ZIMRA.

Rate

Commission Tax Rate

20% of the gross commission paid

This rate has been in effect since 2005 and applies uniformly. One fifth of any commission on insurance premiums or property sale/rental is taken as tax at source.

The Thirty-Second Schedule to the Income Tax Act specifies the mechanics, and the tax is often referred to as "Commissioners' WHT" in practice.

Application

This tax primarily targets freelance or independent agents/brokers who are not on an employer's payroll.

Typical Scenarios

Insurance Agents: If an insurance company pays commission to a freelance insurance agent (not an employee) for bringing in a client, the company must deduct 20% and send it to ZIMRA
Property Brokers: If a person sells a house and pays a commission to an unincorporated estate agent or a broker without tax clearance, 20% must be withheld

Comprehensive Examples

Example 1: Insurance Commission

Scenario: Insurer XYZ Ltd owes a commission of $1,000 to an independent agent for selling a policy.

Withholding Calculation: $1,000 × 20% = $200

Payment to Agent: $1,000 - $200 = $800

Remittance to ZIMRA: $200 (by the 10th of the next month)

Documentation: The insurer must file a REV5 withholding tax return and provide the agent with a certificate showing gross commission and tax withheld.

Example 2: Property Sale Commission

Scenario: A homeowner sells a property and pays a $5,000 commission to an independent real estate broker.

Withholding Calculation: $5,000 × 20% = $1,000

Payment to Broker: $5,000 - $1,000 = $4,000

Remittance to ZIMRA: $1,000

Individuals vs Companies

The 20% commission tax is levied on commissions paid to both residents and non-residents, as long as the recipient isn't an employee on PAYE.

Application Principles

Freelance Agents: Most affected are individual freelance agents
Company Recipients: If commission is paid to a company with valid tax clearance, withholding may not be required
Employee Commissions: If an agent is a salaried employee, their commission is subject to PAYE, not this 20% tax
Non-Resident Agents: The same 20% applies to foreign agents receiving commission from Zimbabwe

After-Tax Treatment

The 20% withheld is considered a final tax on that commission if the recipient is not formally in the tax system.

However, if the agent later files an income tax return (say, they have other income or choose to regularize their taxes), the withheld amount can be claimed as a tax credit against their tax liability.

Example: Tax Credit Application

Scenario: An insurance agent had $2,000 in commissions with $400 withheld during the year.

If Filing Return: The agent can:

Declare the $2,000 as income
Deduct business expenses
Use the $400 as prepaid tax credit

If Not Filing: ZIMRA simply keeps the 20% as the final tax on that income.

Compliance

The obligation to withhold and remit lies with the payer of the commission (insurance companies, insurance brokers paying sub-agents, real estate clients or agencies, etc.).

Remittance Deadline: By the 10th of the next month
Filing Requirement: Must file accompanying REV5 return
Payer Liability: Failure to withhold makes the payer liable for the tax
Recipient Action: No action required if that is their only income – the tax has been paid on their behalf
ZIMRA Monitoring: Active monitoring of insurance industry to ensure compliance

Summary: The Property/Insurance Commission Tax is a 20% withholding mechanism to ensure that commission earnings do not go untaxed; it affects mainly independent agents, with the paying companies acting as withholding agents.

E Tobacco Levy

Legal Basis

The tobacco levy is provided for by Section 36A of the Income Tax Act, with details in the Twenty-Fourth Schedule of that Act, and it is enabled through Section 22A of the Finance Act.

This levy was introduced to tax the lucrative tobacco trade, one of Zimbabwe's key industries, and has been adjusted a few times. The current framework was reinstated effective 2015 (after a temporary suspension for sellers) and continues to apply up to 2025/26.

Who is Liable and Rates

The levy is charged on each sale of tobacco and is split between buyers and sellers of the tobacco:

Party	Rate	Percentage	Description
Buyers	1.5 cents per dollar	1.5%	Tobacco merchants/companies purchasing at auction or via contract
Sellers	0.75 cents per dollar	0.75%	Tobacco growers delivering to auction or under contract

These rates have been in place since 2015, when the levy on sellers was reintroduced at 0.75% (half the buyer's rate). Essentially, the buyer pays twice the rate of the farmer. Both are calculated on the gross tobacco price.

Collection Mechanism

The levy is withheld at the point of sale. According to the law, it must be withheld and paid over in accordance with the Twenty-Fourth Schedule.

Collection Process

Auction Floors: The Tobacco Industry and Marketing Board (TIMB) or auction house withholds 0.75% from farmer's proceeds and adds 1.5% to buyer's invoice
Contract Sales: The contracting company (buyer) handles withholding from farmer's payment and accounts for its portion
Remittance: Both amounts are remitted to ZIMRA

Comprehensive Example

Tobacco Sale Transaction

Scenario: A farmer sells a bale of tobacco for US$1,000 at the auction.

Buyer's Levy: US$1,000 × 1.5% = US$15

Seller's Levy: US$1,000 × 0.75% = US$7.50

Total to ZIMRA: US$15 + US$7.50 = US$22.50

Farmer Receives: US$1,000 - US$7.50 = US$992.50 (after levy and other charges)

Buyer Pays: US$1,000 + US$15 = US$1,015 total

Note: These levies go to the Consolidated Revenue Fund, though there have been policy discussions to use them for tobacco sector support.

Individuals vs Companies

In tobacco levy terms, the distinction is more about role (buyer vs seller) than the nature of the entity.

Application Principles

Sellers: Most are individual farmers or farming entities – all pay 0.75%
Buyers: Most are corporations (local and foreign-owned merchants) – all pay 1.5%
No Differentiation: The law does not differentiate by residency or incorporation
Non-Resident Buyers: Would also be subject to 1.5% levy when purchasing Zimbabwean tobacco
Tax Deductibility: The levy is deductible for income tax purposes as a business expense

Compliance

Compliance is high because the levy is collected at structured sales points.

TIMB Oversight: The Tobacco Industry and Marketing Board oversees the auction and contract sales system
ZIMRA Coordination: TIMB works with ZIMRA to ensure levy remittance
Farmer Compliance: No separate filing required – levy is auto-deducted
Buyer Responsibility: Licensed buyers/auctioneers are responsible for remitting the levy
Penalties: Failure to remit could result in penalties or jeopardize licensing

Summary: The tobacco levy is a straightforward percentage-based charge on tobacco sales, split between buyer (1.5%) and seller (0.75%), and is handled via withholding at the marketplace.

F Carbon Tax

Legal Basis

Zimbabwe's carbon tax was introduced as an environmental levy under Section 36E of the Income Tax Act, with details in Section 22E of the Finance Act.

It was first implemented in the early 2000s and has been updated to align with multi-currency regime changes. The tax is essentially on fossil fuels (petroleum products) and on vehicle emissions, aimed at compensating for environmental costs.

Rates

The carbon tax on fuel is a hybrid levy:

Carbon Tax Rate Structure

Fuel Imports: US$0.04 per liter OR 5% of the CIF value, whichever is higher

Applies to both petrol and diesel fuel imported into Zimbabwe
When fuel prices rise, 5% of value will exceed 4 cents (ad valorem tax)
When prices are low, minimum specific tax of 4c/L is collected

Foreign-Registered Vehicles: US$10 per vehicle per 30-day period (or part thereof)

Flat environmental charge for emissions while in Zimbabwe
Payable upon entry at border posts

Application and Examples

Example 1: Fuel Import - Equal Calculation

Scenario: An oil company imports 10,000 liters of petrol with a CIF value of $8,000 (i.e. $0.80 per liter).

Method 1 (5% of value): $8,000 × 5% = $400

Method 2 ($0.04/L): 10,000 L × $0.04 = $400

Tax Due: $400 (both methods coincide)

Example 2: Fuel Import - Minimum Floor Applies

Scenario: Fuel is very cheap at $0.50/L CIF, 10,000 liters imported.

Total Value: 10,000 L × $0.50 = $5,000

Method 1 (5% of value): $5,000 × 5% = $250

Method 2 ($0.04/L): 10,000 L × $0.04 = $400

Tax Due: $400 (higher amount - ensures minimum floor)

Example 3: Fuel Import - Ad Valorem Applies

Scenario: Fuel prices rise to $1.50/L, 10,000 liters imported.

Total Value: 10,000 L × $1.50 = $15,000

Method 1 (5% of value): $15,000 × 5% = $750

Method 2 ($0.04/L): 10,000 L × $0.04 = $400

Tax Due: $750 (higher amount - ad valorem rate applies)

Example 4: Foreign Vehicle Entry

Scenario: A Botswana-registered car comes into Zimbabwe for a two-week vacation.

Carbon Tax at Border: US$10 (covers up to one month)

If Re-entering Later: Pay again for new period

Note: This $10 flat fee is simple and contributes to environmental funds.

Individuals vs Companies

Application by Taxpayer Type

Fuel Importers: Usually companies or parastatals – all pay same $0.04 or 5% formula
Cost Pass-Through: Importers bear cost initially, then pass on in pump price to consumers
Foreign Vehicles: Targets individuals driving personal or commercial vehicles from outside Zimbabwe
Zimbabwean Vehicles: Do not pay $10 at border (pay indirectly via fuel purchase)
No Vehicle Type Differentiation: $10 per vehicle per month applies to all (small car or heavy truck)

Compliance

Fuel Imports: Collected by ZIMRA at point of importation (like customs/excise duties)
Filing: Importers file entries and pay tax alongside duties when fuel enters country
Monitoring: ZIMRA closely monitors bulk fuel imports at ports of entry
Vehicle Carbon Tax: Collected at border posts with receipt valid for the period
Penalties: Failure to pay can result in penalties if caught
Revenue Use: Funds historically earmarked for environmental protection (now go to general revenue)

Summary: The carbon tax is an environmental levy on fuel usage, implemented through import stage taxation on fuel (4c/L or 5% CIF, whichever is higher) and an entry fee for foreign vehicles ($10/month), and it applies uniformly without distinction among taxpayers.

G Bookmakers and Punters Tax

Legal Basis

Zimbabwe imposes taxes on gambling under Section 36L of the Income Tax Act, with the rates set out in Section 22M of the Finance Act.

Often simply called "bookmakers' tax" and "punters' tax," these were introduced in 2018 and significantly revised in late 2024 to take effect in 2025. They target the betting industry: one tax on the betting company's revenues, and another on gamblers' winnings.

The Betting and Totalizator Control Act [Chapter 10:02] provides the licensing framework for bookmakers, but the tax itself is administered by ZIMRA through the Finance Act provisions.

Rates (After 2025 Reform)

Tax Type	Previous Rate	Current Rate (2025)	Base
Bookmaker's Tax	3%	20%	Gross revenue from betting operations
Punters' Tax	10%	25%	Net winnings (profit portion excluding stake)

Starting 1 January 2025, the bookmaker's tax is 20% of the bookmaker's gross revenue from betting operations (a substantial increase from 3%). Meanwhile, the punters' tax was raised from 10% to 25% of the punter's winnings.

How It Works

Bookmakers (Companies)

The 20% tax on gross revenue is generally treated as a final tax on their betting income.

Gross profit = Total bets received - Payouts to winners
Tax replaces income tax on betting profit (avoids double taxation)
Applies to sports betting companies and licensed bookmakers at racecourses

Punters (Individual Bettors)

Whenever a bet is successful, the operator withholds 25% of the win.

Applied to net profit (winnings minus original stake)
Applies to lottery winnings and any licensed gambling payouts
Not limited to sports bets

Comprehensive Examples

Example 1: Bookmaker's Tax

Scenario: A betting company's monthly operations:

Total bets received: $100,000
Payouts to winners: $80,000
Gross profit: $20,000

Bookmaker's Tax: $20,000 × 20% = $4,000

Note: This $4,000 is in addition to any other taxes (like VAT on betting, if applicable) but likely replaces income tax on the $20,000 profit from betting.

Example 2: Punter's Tax - Small Win

Scenario: A punter stakes $10 and wins $100.

Gross Winnings: $100

Stake: $10

Net Profit: $100 - $10 = $90

Punter's Tax (25%): $90 × 25% = $22.50

Amount Paid to Punter: $100 - $22.50 = $77.50

Or alternatively: $90 - $22.50 + $10 (stake) = $77.50

Example 3: Punter's Tax - Large Win

Scenario: A punter wins $1,000.

Assuming stake was $50:

Net Profit: $1,000 - $50 = $950

Punter's Tax (25%): $950 × 25% = $237.50

Amount Received: $1,000 - $237.50 = $762.50

Impact: The punter loses a quarter of their prize to taxes.

Individuals vs Companies

Bookmaker's Tax

Borne by: The company or individual licensed as a bookmaker
Local vs Foreign: Any licensed operator in Zimbabwe pays 20% on betting revenue
Final Tax: Simplifies compliance (excludes betting income from regular corporate tax)

Punter's Tax

Falls on: Individuals (the gamblers)
Corporate Betting: If a corporate entity bets, tax still withheld at 25%
Residents vs Non-Residents: Both subject to same 25% withholding
No Exemptions: Generally no exemptions (very small winnings might not be taxed administratively)
High Rate Impact: 25% rate possibly aimed at discouraging excessive gambling or raising revenue

Compliance

Bookmakers: Must file monthly or quarterly returns of gross takings and pay 20% tax to ZIMRA
License Enforcement: Compliance enforced through licensing oversight – failure could jeopardize license
Punters' Tax Collection: Collected on the spot by bookmaker/casino at payout time
Reporting: Bookmakers report and remit punters' tax along with bookmaker's tax returns
Bettor Obligations: No further obligation for bettors (don't need to declare wins in income tax returns)
ZIMRA Audits: Can compare total betting volumes to taxes paid to ensure proper computation

Summary: The Bookmakers and Punters taxes heavily tax the gambling sector: bookmakers effectively pay a 20% turnover tax on betting profits, and winners pay 25% of their prize, with the taxes withheld and remitted by the operators. The 2025 reforms significantly increased both rates.

H Demutualisation Levy

Legal Basis

The demutualisation levy is a somewhat specialized tax introduced by Section 36D of the Income Tax Act and implemented via Section 22D of the Finance Act.

It was created around 2000 when some insurance companies and building societies were converting from mutual ownership (owned by policyholders or members) to corporate shareholder ownership – a process known as demutualisation.

The levy is aimed at taxing the one-time windfall gains that members of a mutual entity receive when it demutualises.

Rate and Base

Demutualisation Levy Rate

2.5% of the nominal value of the demutualisation benefit accruing to each member

When a mutual society or insurance company demutualises, each member might receive:

Shares in the new company
Cash payout as compensation
Combination of both

The law imposes a 2.5% tax on that entitlement.

The "amount upon which the levy is payable" is defined in the Twenty-Seventh Schedule of the Act – essentially it's the value of shares or cash each member gets during demutualisation.

Important: Only Zimbabwean members are subject to this levy; non-Zimbabwean members of the mutual society would not be charged (since the Zimbabwe tax jurisdiction covers benefits accruing to locals).

Comprehensive Examples

Example 1: Share Allocation

Scenario: A mutual life insurance company in Zimbabwe demutualises. Each policyholder is given 1,000 shares in the new company, worth US$0.50 each.

Total Value: 1,000 shares × $0.50 = $500

Demutualisation Levy: $500 × 2.5% = $12.50

Collection: The company would likely deduct this amount or require it to be paid before the member receives their full shares.

Example 2: Cash Payment

Scenario: A member receives a $2,000 cash payment as their share of the mutual's retained earnings.

Demutualisation Levy: $2,000 × 2.5% = $50

Net Payment to Member: $2,000 - $50 = $1,950

Example 3: Historical Case - Old Mutual

Context: In the demutualisation of Old Mutual in 1999-2000, such a levy was applied to the benefits allocated to Zimbabwean members.

Note: Old Mutual was originally a mutual insurance society, and the demutualisation levy applied to Zimbabwean policyholders who received shares or cash as part of the conversion.

Individuals vs Companies

Application Principles

Primary Targets: Usually individuals (policyholders, account holders)
Corporate Members: A company can be a member of a mutual (e.g. corporate policyholder) – if Zimbabwe-based, it would also pay 2.5%
Residency Distinction: Zimbabwean members pay 2.5%, foreign members do not
No Size Differentiation: Flat 2.5% applies uniformly on whatever each member receives
One-Time Event: Not an annual tax or recurring charge

Compliance

The demutualisation levy is somewhat unique in that it occurs only when a mutual conversion happens.

Company Responsibility: The mutual society (or successor company) is responsible for withholding and remitting the levy to ZIMRA
Collection Methods:
- Subtract levy from cash distributions
- Require members to pay levy in cash if distributing shares
- Sell small portion of shares to cover levy
Timeline: Twenty-Seventh Schedule outlines that levy should be collected and paid to ZIMRA within specified time after demutualisation date
Member Perspective: Tax is automatically handled; members might see slightly fewer shares or reduced cash amount
Direct Liability: If member receives full allocation without withholding (unlikely), they would be personally liable for 2.5%
ZIMRA Coordination: Closely coordinates when such corporate events occur

Summary: The demutualisation levy is a one-off tax of 2.5% on the benefits from converting a mutual entity to a company, applicable to Zimbabwean members only, and it's usually collected by the entity during the conversion process. Since demutualisations are rare events, the levy is infrequently applied but remains on the books for any future cases.

I Knowledge Check Questions

Question 1

What is the current IMTT rate for foreign currency transactions in Zimbabwe, and what is the cap for high-value transfers?

Question 2

A market vendor pays ZWL 150 monthly rent for their stall. Calculate their monthly and annual presumptive tax liability.

Question 3

An insurance company pays a freelance agent a commission of $3,000. How much should be withheld as commission tax, and when must it be remitted to ZIMRA?

Question 4

Explain the split of the tobacco levy between buyers and sellers. If tobacco is sold for $5,000, how much does each party pay?

Question 5

An oil company imports 20,000 liters of diesel with a CIF value of $1.20 per liter. Calculate the carbon tax due using both methods and determine which applies.

Question 6

What are the current (2025) bookmaker's tax and punters' tax rates? How do these compare to the previous rates?

Question 7

A gambler stakes $20 and wins $500. Calculate the punters' tax and the net amount the gambler receives.

Question 8

What is the demutualisation levy rate, and to whom does it apply?

Question 9

A driving school teaches both class 4 and class 1/2 drivers. What is their monthly presumptive tax, and what is their annual liability?

Question 10

Can businesses deduct IMTT as an expense for income tax purposes? If so, from when was this allowed?

J Quiz Answers

Answer 1

IMTT Rate: 2% for foreign currency transactions

High-Value Cap: Transactions of US$500,000 or more attract a flat IMTT of US$10,150 instead of proportional 2%

Note: ZWL transactions are taxed at 1.5%

Answer 2

Presumptive Tax Rate: 10% of monthly rental

Monthly Tax: ZWL 150 × 10% = ZWL 15

Annual Tax: ZWL 15 × 12 = ZWL 180

Answer 3

Commission Tax Rate: 20% of gross commission

Amount to Withhold: $3,000 × 20% = $600

Payment to Agent: $3,000 - $600 = $2,400

Remittance Deadline: By the 10th of the month following payment

Filing: Must file REV5 withholding tax return

Answer 4

Tobacco Levy Split:

Buyers: 1.5% of purchase price
Sellers: 0.75% of sale price

For $5,000 Sale:

Buyer pays: $5,000 × 1.5% = $75
Seller pays: $5,000 × 0.75% = $37.50
Total to ZIMRA: $112.50

Answer 5

Total Import Value: 20,000 L × $1.20 = $24,000

Method 1 (5% of CIF): $24,000 × 5% = $1,200

Method 2 ($0.04/L): 20,000 L × $0.04 = $800

Tax Due: $1,200 (whichever is higher)

Conclusion: The ad valorem rate (5% of CIF) applies because fuel prices are relatively high.

Answer 6

Tax Type	Previous Rate	Current Rate (2025)	Change
Bookmaker's Tax	3%	20%	+17 percentage points
Punters' Tax	10%	25%	+15 percentage points

Note: Both rates were significantly increased in the 2025 Finance Act reforms.

Answer 7

Gross Winnings: $500

Stake: $20

Net Profit: $500 - $20 = $480

Punters' Tax (25%): $480 × 25% = $120

Net Amount Received: $500 - $120 = $380

Alternative Calculation: $480 - $120 + $20 (stake returned) = $380

Answer 8

Rate: 2.5% of the nominal value of the demutualisation benefit

Applies to: Zimbabwean members only (not foreign members)

Nature: One-time tax on windfall gains when a mutual entity converts to corporate ownership

Collection: Usually withheld by the demutualising entity

Answer 9

Category: Driving school teaching class 1 and 2 (heavy vehicle) drivers

Monthly Presumptive Tax: US$100

Annual Liability: US$100 × 12 = US$1,200

Note: If they only taught class 4 drivers, the rate would be US$50 per month.

Answer 10

Yes, businesses can deduct IMTT as an expense for income tax purposes.

Effective Date: From 2025 onward

Rationale: The law was amended to allow this deduction, recognizing IMTT as a cost of doing business and offering some relief to compliant taxpayers.

K Key Takeaways

1. Specialized Revenue Measures

These levies represent targeted revenue measures that complement the broader income tax system, ensuring specific sectors and transactions contribute appropriately to the fiscus while addressing policy objectives such as formalization, environmental protection, and sector-specific regulation.

2. IMTT - Transaction-Based Tax

The Intermediated Money Transfer Tax is a broad-based levy on electronic money movements (1.5% for ZWL, 2% for foreign currency), with a high-value cap of US$10,150 for transactions over US$500,000. It's administered via financial intermediaries and is now tax-deductible for businesses from 2025.

3. Presumptive Taxes - Informal Sector Focus

Presumptive taxes provide a simplified, fixed approach to taxing small-scale businesses and informal sector operators. Rates vary by category (from US$5 per chair for salons to US$500 for large trucks), and tax-compliant businesses with valid clearance are exempt.

4. Commission Tax - 20% Withholding

The Property/Insurance Commission Tax is a 20% withholding mechanism on commissions paid to freelance agents and brokers. The payer must withhold and remit by the 10th of the next month, with the withheld amount serving as either final tax or a credit if the recipient files a return.

5. Tobacco Levy - Split Between Parties

The tobacco levy is split between buyers (1.5%) and sellers (0.75%), with collection at structured sales points through TIMB coordination. It's a straightforward percentage-based charge on one of Zimbabwe's key industries.

6. Carbon Tax - Environmental Levy

The carbon tax on fuel uses a hybrid formula (US$0.04/L or 5% of CIF, whichever is higher), ensuring a minimum floor while keeping pace with price increases. Foreign vehicles pay a flat US$10 per month entry fee.

7. Gambling Taxes - Significant 2025 Increases

The 2025 reforms dramatically increased gambling taxes: bookmaker's tax from 3% to 20% of gross revenue, and punters' tax from 10% to 25% of winnings. These are among the highest gambling tax rates globally and represent a major shift in sector taxation.

8. Demutualisation Levy - Rare but Important

The demutualisation levy (2.5% of benefits) is a one-off tax on windfall gains from mutual-to-corporate conversions, applicable only to Zimbabwean members. While infrequently applied, it remains relevant for any future demutualisations.

9. Withholding and Collection Mechanisms

Most of these levies are collected through withholding mechanisms or at point of transaction, reducing the burden on taxpayers to file separate returns. Financial institutions, auction houses, and licensed operators act as collection agents for ZIMRA.

10. Compliance Through Third Parties

Compliance is generally achieved through third-party collection: banks for IMTT, licensing authorities for presumptive taxes, payers for commission tax, TIMB for tobacco levy, customs for carbon tax, and bookmakers for gambling taxes. This system ensures high compliance rates with minimal taxpayer filing requirements.

Conclusion

These "Other Income-Based Levies" represent specialized revenue measures that complement Zimbabwe's broader income tax system. Each is grounded in statute and kept up-to-date via Finance Acts. Both individuals and companies may be affected, directly or indirectly, and in some cases special treatment for residents vs non-residents is specified.

For tax professionals and students, understanding these levies is crucial, as they frequently arise in practical scenarios: from everyday mobile money transfers (IMTT), operating a transport business (presumptive tax), earning insurance commissions, selling tobacco, importing fuel, running a betting shop, to once-in-a-generation events like demutualisations.

Mastery of their rates and rules, as detailed in this lesson, is essential for anyone dealing with Zimbabwean tax law in 2025/26.