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Zimbabwe operates a source-based income tax system, not a residence-based one. The gateway to the charge is built into the definition of gross income in Section 8(1) of the Income Tax Act [Chapter 23:06]: only an amount received or accrued "from a source within or deemed to be within Zimbabwe" enters the tax net. Residence is therefore not the primary connecting factor the way it is in many other countries — a non-resident with a Zimbabwean source is taxed, and a resident with a purely foreign source is, as a starting point, outside the charge. This single design choice drives almost every rule in this lesson.

Because a pure source test would let mobile income and modern cross-border arrangements escape, the Act bolts on a series of deeming provisions that pull specified foreign-flavoured amounts into a Zimbabwean source. The central catalogue is Section 12 ("Circumstances in which amounts are deemed to have accrued from sources within Zimbabwe"), supported by Section 10 (amounts deemed to have accrued even if not yet paid) and Section 11 (income from assets in deceased and insolvent estates). Several of the Section 12 deeming rules are switched on only when the taxpayer is "ordinarily resident" in Zimbabwe — so residence re-enters the system as a secondary factor that widens the net for residents, even though it is not the gateway.

Residence does the heaviest lifting for companies. Under Section 19A (inserted by the Finance Act (No. 2) of 2017, backdated to 1 January 2017) a company not resident in Zimbabwe is liable to Zimbabwean tax only if it carries on business here through a permanent establishment, and then only on the taxable income attributable to that permanent establishment. Section 19B defines "permanent establishment" (a fixed place of business, or a dependent agent who habitually concludes contracts), with the usual independent-agent and preparatory/auxiliary carve-outs. A company's residence itself turns on the common-law central management and control test, reflected in the Act's deeming rule that a company is "ordinarily resident in the state or territory in which its central management and control is situated."

Key defined terms you must hold precisely: "source" (an originating cause located somewhere — a question of fact, not where payment is made); "deemed source" (a statutory override that fixes a Zimbabwean source regardless of true origin); "ordinarily resident" (a common-law concept of habitual, settled residence — there is no statutory definition for individuals, so it is decided on the facts); and "resident"/"non-resident" as used in particular provisions. A recurring trap is Section 12(1)(c), which deems a Zimbabwe source for employment services an ordinarily resident person performs abroad during a "temporary absence" — defined as absence not exceeding 183 days in aggregate in the year of assessment.

The rates that attach once an amount is inside the net are set by the annual Finance Act [Chapter 23:04] (the "charging Act"): for the 2025 year of assessment, companies and trusts are taxed at 25% (Finance Act Section 14(2)(c)), individuals on a sliding scale up to 40% on taxable income above US$36,000, and a foreign-domiciled satellite-broadcasting or e-commerce operator caught by Section 12(6)/(7) and Section 12A pays 5% of its Zimbabwean revenue (Finance Act Section 14(2)(k)) once that revenue exceeds US$500,000 in the year. An AIDS Levy surcharge is added to the income tax payable.

Finally, where Zimbabwe has concluded a Double Taxation Agreement (DTA), the treaty overlays these domestic rules — reducing source-country rates, raising the permanent-establishment threshold and supplying residence tie-breakers. Crucially, you engage the domestic charging and source rules first, and only then apply the treaty as relief (see the dedicated lesson on Double Taxation Agreements). DTA relief in Zimbabwe is delivered through Sections 91 to 93 of the Income Tax Act.

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Every income tax system needs a connecting factor — a link between an amount of income and the country that claims the right to tax it. Two great families of connecting factor exist. A residence-based (or "worldwide") system taxes its residents on income arising anywhere in the world, and taxes non-residents only on income arising inside the country. A source-based (or "territorial") system does the opposite as its centre of gravity: it taxes income that arises within the country regardless of who earned it, and largely leaves foreign-source income of its residents alone.

Zimbabwe is, at its foundation, a source-based system. This is not a matter of policy preference floating free of the statute — it is written into the very definition of what is taxable. As established in the lesson on Gross Income, Section 8(1) of the Income Tax Act [Chapter 23:06] defines "gross income" as:

"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 … proved by the taxpayer to be of a capital nature …".

Read that phrase slowly, because it contains the entire architecture of this lesson. An amount only becomes "gross income" — the entry point to the whole computation funnel (gross income → less exemptions → income → less deductions → taxable income → tax) — if it has a source within Zimbabwe or a source deemed to be within Zimbabwe. There is no general rule that simply taxes a Zimbabwean resident on their global income. The country reaches across its borders only where a specific deeming provision says so.

Why does this matter so much in practice, and why is it heavily examined and heavily audited?

First, because it means a non-resident can be fully taxable in Zimbabwe. A foreign company that concludes a contract of sale in Harare, or a foreign consultant whose work is physically done in Zimbabwe, has a Zimbabwean source and is within the charge — residence is irrelevant to that conclusion. ZIMRA pays close attention to cross-border service fees, construction projects, and management arrangements precisely because the source test, not residence, decides them.

Second, because it means a Zimbabwean resident is not automatically taxed on foreign income — but may be caught by a deeming rule. The single most common error in Zimbabwean practice is to think in residence-based terms ("she's a Zimbabwean, so her foreign salary is taxable here") when the correct question is always "what is the source of this amount, and does any deeming provision apply?"

Third, because the boundary between "source" and "deemed source" is where most disputes live. "Source" is a common-law, fact-driven concept with over a century of case law behind it; "deemed source" is a set of statutory overrides that change the answer the common law would give. A practitioner who cannot move fluently between the two will misclassify income.

This lesson builds directly on Income Tax Foundations (the charging Section 6, the year of assessment, and the two-statute design) and on Gross Income (the Section 8 definition and its six "gates"). It is the natural companion to Persons Liable to Income Tax (which establishes that the charge falls on "any person" with a Zimbabwean source) and a prerequisite for Withholding Taxes, Taxation of Non-Residents, Digital Tax Administration and Double Taxation Agreements, all of which are essentially detailed applications of the source-and-residence machinery set out here.

The residence-and-source rules are spread across several sections of the Income Tax Act [Chapter 23:06] and are completed by the Finance Act [Chapter 23:04] (rates) and the DTAs given force under Sections 91 to 93. The key provisions, by number, are as follows.

B.1 The gateway — Section 8(1)

The defined term "gross income" in Section 8(1) is the gateway. Its operative words for our purposes are "from a source within or deemed to be within Zimbabwe." Everything else in this lesson either explains what a "source within Zimbabwe" means (a common-law question) or identifies a provision that creates a "deemed" source.

Note three structural points carried over from the Gross Income lesson:

1. The capital exclusion ("proved by the taxpayer to be of a capital nature") sits inside the same definition — so an amount can be of Zimbabwean source yet still fall out of gross income because it is capital (then consider Capital Gains Tax instead).
2. The phrase "received by or accrued to … or deemed to have been received by or to have accrued to" imports the timing rules — see Section 10 below.
3. Source is tested on the amount, transaction by transaction; a single taxpayer can have some Zimbabwean-source and some foreign-source receipts in the same year.

B.2 Section 10 — special circumstances in which income is deemed to have accrued

Section 10 is a timing and attribution provision, not a source provision, but it is part of the same machinery and is frequently confused with Section 12, so it must be understood here. Section 10(1) provides that income is deemed to have accrued to a person even though it:

• "(a) has been invested, accumulated or otherwise capitalized by him; or
• (b) has not been actually paid over to him but remains due and payable to him; or
• (c) has been credited to an account or re-invested or accumulated or capitalized or otherwise dealt with in his name or on his behalf",

and the person must include "a complete statement of all such income" in their returns. The point is that you cannot defer a Zimbabwean-source accrual by leaving the money in the company, crediting it to a loan account, or capitalising it — accrual is about the right to the amount, not its physical receipt.

The rest of Section 10 contains important attribution rules that recur elsewhere in the chapter:

• Section 10(2) — partnership income is deemed to accrue to the partners on the accounting date in their profit-sharing ratios. This is the statutory root of partnership "transparency": the partnership is not itself a taxpayer (see the lesson on Persons Liable and the lesson on Taxation of Partnerships); each partner is taxed on their share, and the source is tested at partner level.
• Sections 10(3)–(6) — anti-avoidance attribution of income diverted to minor children or held under donations, settlements and other dispositions, deeming that income back to the parent or settlor where they retain control or benefit. These interlock with the anti-avoidance code in Section 98/98A (see Transfer Pricing and Anti-Avoidance).
• Section 10(7) — an amount to which a taxpayer becomes entitled during the year but which is payable after year-end is deemed to have accrued during that year (subject to Sections 8(2), 17 and 18).

B.3 Section 11 — income from assets in deceased and insolvent estates

Section 11 governs whose income an amount from an estate is, and operates together with the residence rule for estates (see section B.7 below) and the representative-taxpayer rules. In outline:

• An "ascertained beneficiary" (a person named or identified in the will who acquires, on death, an "immediate certain right" to present or future enjoyment of the income) is taxed on income that accrues to them — Section 11(2).
• Section 11(3) deals with the window between a person becoming entitled to transfer of an asset and the actual transfer, attributing the income to the entitled person (or to the trust where no beneficiary is entitled).
• Section 11(4) clarifies that amounts which would have been the deceased's income are income of the estate (paragraph (a)); that purely ex gratia / gratuitous post-death receipts the deceased had no right to claim are not income (paragraph (b)); and that amounts due and payable before death which the deceased could claim are the deceased's income on the due date (paragraph (c)).

The deceased-estate and trust dimension is treated fully in the lesson on Trusts and Deceased Estates; here it matters because the source and residence of estate income follow these attribution rules.

B.4 Section 12 — the catalogue of deemed Zimbabwean sources

Section 12 is the heart of the deeming machinery. Each subsection fixes a Zimbabwean source for a category of amount that the pure common-law source test might otherwise locate abroad. Walk it clause by clause.

Section 12(1) — an amount is deemed to accrue from a Zimbabwean source whenever it is received or accrues to a person:

• (a) under any contract made within Zimbabwe for the sale of goods, whether the goods are delivered in or out of Zimbabwe. The place where the sale contract is concluded fixes the source — delivery location is irrelevant.
• (b) for any service rendered or work or labour done by the person in the carrying on in Zimbabwe of any trade, whether the payer is resident in or outside Zimbabwe and wherever payment is made. Services physically carried on in Zimbabwe have a Zimbabwean source — the residence of the payer and the place of payment are both irrelevant. (Annotated in the source Act with Ka. v CoT 93-SC-001.)
• (c) for services rendered or work done as an employee outside Zimbabwe during a "temporary absence", if the person is ordinarily resident in Zimbabwe, wherever the payer is resident and wherever payment is made. This is the rule that pulls a Zimbabwe-resident employee's foreign earnings back into the Zimbabwean net while they are only temporarily away. The paragraph supplies its own definitions: "temporary absence" means absence not exceeding, in aggregate, 183 days during the year of assessment, and "employee" includes a director of a company.
• (d) for services rendered to the State, inside or outside Zimbabwe — with a proviso that an amount for services rendered outside Zimbabwe is not deemed Zimbabwean-source if the person was not ordinarily resident outside Zimbabwe solely for the purpose of rendering that service.
• (e) by virtue of a pension or annuity for services rendered, granted by any person wherever resident, the Government of the former Federation, or the State — wherever the funds are situated or payment is made. Detailed provisos carve out pensions for services performed wholly outside Zimbabwe and apportion pensions earned partly in and partly outside Zimbabwe in the ratio of Zimbabwean service to total service.
• (f) in the circumstances specified in subsections (6) and (7) — i.e. the digital-economy deeming rules (inserted by the Finance Act 1/2019, w.e.f. 1 January 2019).

Section 12(2) — an amount of interest or dividends on securities derived from a source outside Zimbabwe is deemed to be from a Zimbabwean source if the recipient is ordinarily resident in Zimbabwe when it is received or accrues. This is the most important residence-driven extension of the net for individuals and is annotated in the source Act with PPC v ZIMRA 19-HH-755. The provisos deal with the special charging of certain securities income and with a credit gross-up where the taxpayer is entitled to a foreign tax credit (linking to the DTA/credit machinery in Sections 91–93).

Section 12(3) — a foreign-source annuity the right to which was bought (by paying a sum of money or disposing of an asset) is deemed Zimbabwean-source if the annuitant was ordinarily resident in Zimbabwe when the right was acquired.

Section 12(4) — an amount for the use in Zimbabwe of, or permission to use in Zimbabwe, or the imparting of knowledge connected with the use in Zimbabwe of, intellectual property (patents, designs, trade marks, copyright, models, plans, secret processes, formulae, similar property, films, sound recordings, advertising matter) is deemed Zimbabwean-source — wherever produced, granted, imparted or paid, and whether the payer is resident in or outside Zimbabwe. This is the royalty-source rule (annotated with T M Fee' v COT 91-ITC-1535) and underpins the non-resident royalties withholding tax.

Section 12(5) — amounts required to be included in gross income as recoupments under paragraphs (i) or (j) of the Section 8(1) definition are deemed Zimbabwean-source even if recovered or recouped outside Zimbabwe (cross-reference the Capital vs Revenue and Capital Allowances lessons).

Sections 12(6), (7), (8) — the digital-economy deeming rules. Subsection (6) deems Zimbabwean-source any amount receivable by a satellite broadcasting service domiciled outside Zimbabwe from persons resident in Zimbabwe for delivery of television/radio programmes. Subsection (7) deems Zimbabwean-source any amount receivable by an electronic commerce operator domiciled outside Zimbabwe from persons resident in Zimbabwe for goods or services (other than those already caught by Section 12(1)(d) and 12(4)). Subsection (8) defines "electronic commerce operator" (an operator selling/providing/delivering services from outside Zimbabwe by telecommunications network or electronic means to customers in Zimbabwe) and "satellite broadcasting service".

B.5 Section 12A — taxation of the deemed digital income

Section 12A (inserted by Finance Act 1/2019, w.e.f. 1 January 2019) charges the income deemed Zimbabwean-source by Section 12(6)/(7). It applies to a satellite-broadcasting or e-commerce operator whose Zimbabwean revenues exceed US$500,000 in the year of assessment (Section 12A(2)), taxing those revenues at the rate in Finance Act Section 14(2)(k) — confirmed in the source Finance Act as 5%. Importantly, Section 12A(4) disapplies the permanent-establishment machinery (Sections 19A and 19B) to this income — the digital deeming rule stands on its own and does not require a PE. Section 12A(5) obliges the foreign operator to appoint a representative taxpayer domiciled in Zimbabwe within 30 days. (This topic is developed in the lesson on Digital Tax Administration; it appears here because it is a residence/source provision at root — it deems a source and disapplies the residence-based PE test.)

B.6 Sections 19A and 19B — the company-residence basis of charge

For companies, residence is decisive, and the mechanism is Sections 19A and 19B.

Section 19A ("Non-resident companies: basis of charge to and determination of company tax", inserted by Finance Act (No. 2) of 2017, backdated to 1 January 2017) provides:

• 19A(1) — a company not resident in Zimbabwe is liable to tax if it carries on a business in Zimbabwe through a permanent establishment in Zimbabwe;
• 19A(2) — if it does, it is taxed on all taxable income, wherever arising, that is attributable to that permanent establishment;
• 19A(3)–(5) — the attributable income is computed on a separate-enterprise, arm's-length basis: the permanent establishment is treated as a "distinct and separate enterprise … dealing wholly independently" with the head office, with assumed equity/loan capital and the credit rating of the parent, and allowable expenses (including a fair share of executive and general administrative expenses, wherever incurred) deductible.

The combined effect is that a non-resident company without a Zimbabwean permanent establishment is taxed only on income that has an actual Zimbabwean source (for example, a contract of sale made in Zimbabwe under Section 12(1)(a), or royalties deemed sourced under Section 12(4) and collected by withholding) — it is not drawn into the full Zimbabwean computation. A non-resident company with a permanent establishment is taxed on the profits attributable to that establishment.

Section 19B defines "permanent establishment". A company has a permanent establishment in Zimbabwe if and only if:

• (1)(a) it has a fixed place of business there through which its business is wholly or partly carried on; or
• (1)(b) an agent acts on its behalf and habitually concludes contracts, or habitually plays the principal role leading to the conclusion of contracts routinely concluded without material modification, where those contracts are in the company's name, or for the transfer/use of its property, or for the provision of its services.

Section 19B(2) qualifies this:

• (2)(a) a "fixed place of business" includes a place of management, a branch, an office, a factory, a workshop, an installation or structure for the exploration of natural resources, a mine/oil or gas well/quarry/other place of extraction, and a building site or construction or installation project;
• (2)(b) the independent-agent carve-out: no permanent establishment arises merely because business is carried on through an agent of independent status acting in the ordinary course of business — but a person acting exclusively or almost exclusively for one or more closely related companies is not an independent agent;
• (2)(c) the preparatory or auxiliary carve-out: no permanent establishment arises from facilities used solely for storage, display or delivery of goods; maintaining stock solely for storage/display/delivery or for processing by another enterprise; a fixed place solely for purchasing goods or collecting information; or solely for any other preparatory or auxiliary activity (or any combination of these, provided the overall activity is preparatory or auxiliary);
• (2)(d) "closely related" is defined by a more-than-50% beneficial-interest / vote-and-value test.

These definitions closely track the OECD/UN Model treaty concept of a permanent establishment, which is why they interact smoothly with Zimbabwe's DTAs (see the Double Taxation Agreements lesson).

B.7 Residence of persons — the defined terms

The Act does not contain a general statutory definition of "ordinarily resident" for individuals. It is a common-law concept decided on the facts (see section C below). What the Act does fix is:

• "company" — by Section 2 the term "includes any association wheresoever incorporated"; and for residence, the Act repeatedly treats a company as "ordinarily resident in Zimbabwe" for the relevant provision, deeming a company (and a "foreign company") to be "ordinarily resident in the state or territory in which its central management and control is situated." A "foreign company" is "a body corporate which is ordinarily resident in a state or territory other than Zimbabwe." Place of incorporation is therefore not the residence test — central management and control is.
• Estates — Section 10 (read with the estate provisions) treats a deceased estate as ordinarily resident in Zimbabwe if the deceased was ordinarily resident here at death, an insolvent estate likewise by reference to the insolvent, and a trust by reference to its administration in Zimbabwe or an ordinarily resident trustee.

B.8 Rates and the charging Act

Once an amount is inside the net, the Finance Act [Chapter 23:04] fixes the rate for the year of assessment. For YA 2025: companies and trusts at 25% (Finance Act Section 14(2)(c)); individuals on the sliding USD scale (nil up to US$1,200; then 20%, 25%, 30%, 35% and 40% above US$36,000, with the relevant subtraction amounts per band); the digital operator at 5% (Section 14(2)(k)). An AIDS Levy surcharge applies to the income tax payable.

B.9 DTAs — Sections 91 to 93

Where a treaty partner is involved, Sections 91 to 93 give DTAs force of law and provide foreign-tax-credit relief. A treaty can reduce Zimbabwean source-country tax, raise the threshold for taxing a foreign enterprise (by requiring a treaty permanent establishment), and supply tie-breaker rules where a person is resident in both states. The governing principle — charge first under domestic law, then relieve under the treaty — and the credit mechanics are covered fully in the Double Taxation Agreements lesson; this lesson supplies the domestic source-and-residence rules the treaty then modifies.

C.1 What "source" actually means

The Act charges income from a "source within … Zimbabwe" but does not define "source". The meaning is supplied by a long line of case law (largely South African and English, persuasive in Zimbabwe because of the shared Roman-Dutch and statutory heritage — but not binding). The settled approach has two limbs:

1. The originating cause — you ask what gave rise to the income: the work done, the capital employed, the asset let, the contract concluded, the service performed. This is sometimes called the "true source" or the "real and basic cause" of the receipt.
2. The location of that originating cause — you then ask where that cause is situated.

The classic formulation is that source is "not the quarter whence [the income] comes, but the originating cause of its being received as income, and the location of that source" — drawn from CIR v Lever Brothers & Unilever Ltd 1946 AD 441 (South African, persuasive, non-binding).

Two consequences flow from this:

• Where the money is paid from, and the residence of the payer, are not the source. A Zimbabwean company that pays a foreign consultant for work done entirely abroad has not created a Zimbabwean source merely by paying from Harare. Conversely, a foreign company that pays a Zimbabwean worker for work done in Zimbabwe has a Zimbabwean source for that worker. Section 12(1)(b) codifies exactly this for services carried on in Zimbabwe.
• Different kinds of income have different "originating causes." Trading income is generally sourced where the income-producing activity occurs; rental income where the property is; royalties where the intellectual property is used; employment income where the services are rendered; interest at the place where the credit is made available or the debtor is situated (a contested question often resolved by the deeming rules). You must classify the income before you can locate its source.

C.2 "Source" versus "deemed source"

Once you have identified the common-law source, you must ask the second question: does a deeming provision override the answer? A deemed source is a statutory instruction that, for tax purposes, an amount is treated as having a Zimbabwean source whether or not it really does. The deeming provisions in Section 12 do not discover a Zimbabwean source — they create one. Where a deeming provision applies, it wins; you do not go back and argue the common-law source.

This is why the order of analysis matters:

1. Identify and classify the amount.
2. Apply any deeming provision that fits (Section 12(1)–(7), Section 10 for timing, Section 8(5)/12(5) for recoupments). If one applies, the source is Zimbabwean — stop.
3. If no deeming provision applies, fall back to the common-law source test.
4. Only after the domestic source question is settled do you consider a DTA (which may then remove or reduce the Zimbabwean charge).

C.3 "Ordinarily resident" — a common-law test for individuals

Because several deeming provisions (Sections 12(1)(c), 12(2), 12(3)) switch on for a person "ordinarily resident in Zimbabwe", you must be able to decide residence for an individual — and the Act gives you no definition. The common law fills the gap. To be "ordinarily resident" is to reside in a place with some degree of continuity and as part of the ordinary, settled course of one's life — the country to which a person would naturally return from their wanderings, their "real home". Leading persuasive authorities are Cohen v CIR 1946 AD 174 and CIR v Kuttel 1992 (3) SA 242 (A) (both South African, non-binding).

Practical indicators a Zimbabwean court or ZIMRA will weigh include: where the person's permanent or principal home is; the location of family and social ties; the pattern and purpose of absences; the place of habitual abode over time; and the person's own intention as evidenced by conduct (not merely by assertion). A person can be physically absent for long periods yet remain ordinarily resident if Zimbabwe remains their settled home — which is exactly the situation Section 12(1)(c) addresses with its 183-day "temporary absence" rule.

A subtle distinction sometimes drawn is between being "resident" (present and living somewhere) and "ordinarily resident" (resident as part of the regular order of one's life). The deeming provisions use "ordinarily resident", which is the stronger, more settled concept — a brief or casual presence is not enough to make a person ordinarily resident.

C.4 The 183-day "temporary absence" rule (Section 12(1)(c))

This rule deserves its own treatment because it is so often mishandled. It applies to an employee (which includes a director) who is ordinarily resident in Zimbabwe and who performs services outside Zimbabwe during a temporary absence. "Temporary absence" is absence not exceeding 183 days in aggregate in the year of assessment. If those conditions are met, the foreign-earned employment income is deemed to have a Zimbabwean source and is taxable here — irrespective of where the employer is or where the salary is paid.

Note the precise mechanics:

• The 183 days are aggregated across the whole year of assessment, not measured per trip. Several short foreign assignments can add up to a "non-temporary" absence.
• The rule is keyed to ordinary residence in Zimbabwe. An employee who has genuinely ceased to be ordinarily resident here is outside the rule.
• It applies to employment services (paragraph (c)); independent service income carried on in Zimbabwe is dealt with by paragraph (b), and services rendered to the State by paragraph (d).
• Once the absence exceeds 183 days in aggregate, paragraph (c) no longer deems a Zimbabwean source for the foreign services — but you must then check the common-law source and any other deeming provision before concluding the income escapes.

C.5 Company residence — "central management and control"

For a company, residence turns on where its central management and control is in fact exercised — the place where the directing mind and will of the company sits, where the strategic, top-level decisions are actually made (typically where the board effectively meets and governs). The Act reflects this by deeming a company "ordinarily resident in the state or territory in which its central management and control is situated." This is a substance test: it looks past the place of registration to where real control happens.

The classic statement of the principle is De Beers Consolidated Mines Ltd v Howe 1906 5 TC 198 (House of Lords) — a company resides "where its real business is carried on … where the central management and control actually abides" (English, persuasive, non-binding).

Why the substance test matters: a company incorporated abroad but managed and controlled from Harare is resident in Zimbabwe (and so taxable on a residence basis for the provisions that use it, and outside the Section 19A "non-resident company" regime). Conversely, a company incorporated in Zimbabwe but genuinely managed and controlled abroad may be a "foreign company" — though manipulating this is squarely within the sights of the anti-avoidance code (Section 98) and is fact-intensive.

C.6 The non-resident company regime (Sections 19A/19B) in operation

Putting B.6 to work, the analysis for a foreign company earning amounts connected with Zimbabwe runs:

1. Is the company resident in Zimbabwe (central management and control here)? If yes, it is taxed as a resident company on its Zimbabwean-source and deemed-source income.
2. If non-resident, does it have a permanent establishment in Zimbabwe under Section 19B (fixed place of business, or dependent agent habitually concluding contracts, subject to the independent-agent and preparatory/auxiliary carve-outs)? - Yes → taxed under Section 19A on the taxable income attributable to that permanent establishment, computed on the separate-enterprise arm's-length basis. - No → taxed only on income with an actual Zimbabwean source (e.g. a contract of sale made in Zimbabwe; royalties or fees deemed sourced and collected by withholding tax — see the Withholding Taxes lesson).
3. Overlay any DTA, which may raise the permanent-establishment threshold or reduce withholding rates.

C.7 How residence widens the net for residents

Although the system is source-based, residence is the trigger that extends it for residents in three specific, enumerated situations — and only these:

• Section 12(1)(c) — a Zimbabwe-ordinarily-resident employee's foreign employment income during a temporary absence (≤183 days).
• Section 12(2) — a Zimbabwe-ordinarily-resident person's foreign interest and dividends on securities.
• Section 12(3) — a person ordinarily resident in Zimbabwe when they acquired a foreign annuity by purchase.

Outside these (and the State-service rule in 12(1)(d)), a resident's genuinely foreign-source income is not drawn in by residence alone. This is the precise sense in which Zimbabwe is "source-based with residence-based extensions", and getting the list exactly right is what separates a correct answer from a confident wrong one.

D.1 Individuals

Scenario 1 — the temporarily-seconded employee. Tendai is ordinarily resident in Harare and employed by a Zimbabwean engineering firm. In YA 2025 he is seconded to a project in Zambia for 150 days, paid US$2,000 per month into a Zambian bank account by the firm's Zambian affiliate. Total foreign salary for the secondment: US$10,000.

• Source analysis: the services are performed outside Zimbabwe, so the common-law source is Zambian. But Tendai is ordinarily resident in Zimbabwe and his absence (150 days) does not exceed 183 days in aggregate, so Section 12(1)(c) deems the US$10,000 to have a Zimbabwean source. It is gross income in Zimbabwe.
• Outcome: the US$10,000 is added to his other taxable income and taxed at his marginal rate. If Zambia also taxed it, a DTA between Zimbabwe and Zambia (or unilateral relief under Section 93) would relieve double taxation by credit — see the DTA lesson.

Scenario 2 — the same employee, longer absence. If Tendai's foreign assignment instead totalled 200 days in the year, the absence is not "temporary" (it exceeds 183 days in aggregate), so Section 12(1)(c) does not apply to deem a Zimbabwean source. The foreign salary's source is Zambian, and unless another deeming provision applies, it is outside the Zimbabwean charge. (His residence status itself may also be in question if the pattern persists.)

Scenario 3 — foreign investment income of a resident. Rumbidzai, ordinarily resident in Bulawayo, earns US$3,000 of dividends on shares listed on the Johannesburg Stock Exchange. Under Section 12(2), because she is ordinarily resident in Zimbabwe when the dividends accrue, the US$3,000 is deemed Zimbabwean-source and taxable here (with credit for any South African tax under the DTA/Section 93). Had she not been ordinarily resident, Section 12(2) would not reach the dividends.

D.2 SMEs and partnerships

Scenario 4 — a partnership with cross-border work. Masuku & Partners, a Bulawayo quantity-surveying partnership (three resident partners), bills US$60,000 for survey work — US$45,000 for projects physically carried out in Zimbabwe and US$15,000 for a project carried out in Botswana by one partner who spent 40 days there.

• The partnership is transparent: under Section 10(2), the profits are deemed to accrue to the partners in their sharing ratio, and source is tested at partner level.
• The US$45,000 of Zimbabwean work is Zimbabwean-source under Section 12(1)(b) (services carried on in Zimbabwe).
• The US$15,000 of Botswana work is performed abroad. Section 12(1)(b) requires the trade to be carried on in Zimbabwe; Section 12(1)(c) only deems employment income, not independent partnership income. So the common-law source governs the US$15,000, which is Botswanan-source and, on these facts, outside the Zimbabwean charge for the partners — unless the dominant income-producing activity (planning, supervision, contracting) was actually conducted in Zimbabwe, in which case part may be Zimbabwean-source. This is a classic fact-sensitive apportionment ZIMRA will scrutinise.

D.3 Large corporates and multinationals

Scenario 5 — a non-resident contractor without a PE. BuildCo (Pty) Ltd, a South African company managed and controlled in Johannesburg, sells prefabricated steel to a Zimbabwean buyer under a contract concluded in Johannesburg, delivering into Zimbabwe. BuildCo has no office, site or dependent agent in Zimbabwe.

• BuildCo is non-resident (central management and control in South Africa) and has no permanent establishment (Section 19B). Under Section 19A it is taxable in Zimbabwe only on actual Zimbabwean-source income.
• The sale contract was made outside Zimbabwe, so Section 12(1)(a) (which deems source only for contracts of sale made within Zimbabwe) does not apply, and the common-law source of the trading profit is South African. No Zimbabwean income tax arises on the sale (VAT/customs on importation are separate heads).

Scenario 6 — a non-resident with a construction PE. Now suppose BuildCo wins a contract to erect the structures on a Zimbabwean site, with its own crew on site for eight months. A building or construction site is a fixed place of business under Section 19B(2)(a)(viii), so BuildCo has a permanent establishment in Zimbabwe. Under Section 19A it is taxed on the taxable income attributable to that permanent establishment, computed on the separate-enterprise arm's-length basis (Section 19A(4)), with a fair share of head-office expenses deductible (Section 19A(5)(d)). A DTA would confirm the PE (often subject to a minimum duration threshold for construction sites) and allocate taxing rights accordingly.

Scenario 7 — a foreign digital operator. StreamGlobal Inc., domiciled in the United States with no Zimbabwean presence, earns US$900,000 in YA 2025 from Zimbabwean subscribers to its streaming service. Under Section 12(7)/(8) it is an electronic commerce operator whose revenue from Zimbabwe is deemed Zimbabwean-source; because that revenue exceeds US$500,000, Section 12A charges it at 5% (Finance Act Section 14(2)(k)) — i.e. US$45,000. The PE rules (Sections 19A/19B) are expressly disapplied by Section 12A(4), and StreamGlobal must appoint a Zimbabwean representative taxpayer within 30 days (Section 12A(5)). (Computation: US$900,000 × 5% = US$45,000.)

The following authorities are annotated in, or directly relevant to, the source-and-residence provisions. Zimbabwean and Rhodesian decisions bind or strongly guide; South African and English decisions are persuasive only.

• Ka. v CoT 93-SC-001 (Zimbabwe, Supreme Court) — annotated to Section 12(1)(b). Concerns the deemed Zimbabwean source of amounts for services or work done in the carrying on of a trade in Zimbabwe, confirming that the place where the income-producing activity is conducted, not the residence of the payer or place of payment, fixes the source for service income.

• T M Fee' v COT 91-ITC-1535 (Zimbabwe) — annotated to Section 12(4). Concerns amounts for the use in Zimbabwe of intellectual property / imparting of knowledge, supporting the rule that royalty-type income connected with use in Zimbabwe is deemed Zimbabwean-source wherever the IP was produced or payment made; relevant also to foreign-tax credit treatment of withheld amounts.

• PPC v ZIMRA 19-HH-755 (Zimbabwe, High Court) — annotated to Section 12(2). Supports the deeming of a Zimbabwean source for foreign interest and dividends of a person ordinarily resident in Zimbabwe, and touches the credit gross-up where foreign tax has been suffered.

• BAT v Commissioner of Taxes 94-HH-001 (Zimbabwe) — annotated near the "foreign company" definition and the associated-enterprise/arm's-length rules; relevant to how the residence of a company and its dealings with associates are characterised (links to the arm's-length restatement in Section 24 and Transfer Pricing).

• Mota Engenharia 22-SC-115 (Zimbabwe, Supreme Court) — establishes (as recorded in the Persons Liable lesson) the breadth of "person" and the taxation of a non-resident on Zimbabwean-source service income; illustrates the source test applied to a foreign contractor.

Persuasive foreign authorities on the underlying concepts (label non-binding):

• CIR v Lever Brothers & Unilever Ltd 1946 AD 441 (South Africa) — the foundational statement that source is the originating cause of the income and its location, not the place of payment.
• Cohen v CIR 1946 AD 174 and CIR v Kuttel 1992 (3) SA 242 (A) (South Africa) — the meaning of "ordinarily resident" as a settled, habitual home.
• De Beers Consolidated Mines Ltd v Howe 1906 5 TC 198 (UK, House of Lords) — company residence is where central management and control actually abides.

1. Thinking in residence-based terms. The instinctive question "is the taxpayer Zimbabwean?" is the wrong first question. The right first question is "what is the source of this amount?" Residence only matters where a specific provision (12(1)(c), 12(2), 12(3), 12(1)(d), or the company rules) makes it matter.
2. Treating the place of payment or the payer's residence as the source. Both are irrelevant to common-law source (and Section 12(1)(b)/(c) say so expressly). Source is about the originating cause and its location.
3. Mishandling the 183-day rule. Errors include measuring per-trip rather than in aggregate over the year, forgetting that "employee" includes a director, and forgetting that the rule only applies to a person ordinarily resident in Zimbabwe performing employment services abroad.
4. Assuming a non-resident company is fully taxable (or fully exempt). It is neither: with a PE it is taxed on PE-attributable income (Section 19A); without a PE it is taxed only on actual Zimbabwean-source income (often collected by withholding). Do not import the whole computation for a non-resident, and do not assume "no PE" means "no Zimbabwean tax" — check the deeming and withholding provisions.
5. Using place of incorporation as company residence. Residence is central management and control, a substance test. A Zimbabwe-incorporated company managed abroad, or a foreign-incorporated company managed from Harare, will surprise the unwary.
6. Forgetting the digital deeming rules. A foreign e-commerce or satellite operator with no presence and no PE can still owe 5% under Sections 12(6)/(7) and 12A once Zimbabwean revenue exceeds US$500,000 — and the PE rules are deliberately disapplied.
7. Applying a DTA before the domestic charge. A treaty is relief, not a charging provision. Engage the domestic source/residence rules and the charging section first; only then apply the DTA to reduce or remove the charge (the error corrected in GFZ v ZIMRA 19-HH-843, discussed in the DTA lesson).
8. Confusing Section 10 (timing/attribution) with Section 12 (source). Section 10 tells you when and to whom income accrues; Section 12 tells you where it is sourced. Both can apply to the same amount; neither does the other's job.

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.

• Zimbabwe taxes on a source basis. The gateway in Section 8(1) is income "from a source within or deemed to be within Zimbabwe." Residence is not the primary connecting factor.
• Source = the originating cause and its location, a fact question (persuasive authority CIR v Lever Bros 1946 AD 441). The place of payment and the payer's residence are irrelevant.
• Deemed source overrides common-law source. Section 12 is the catalogue: sales contracts made in Zimbabwe (12(1)(a)); services carried on in Zimbabwe (12(1)(b)); a resident's foreign employment income during a temporary absence ≤183 days (12(1)(c)); State services (12(1)(d)); pensions/annuities (12(1)(e), 12(3)); a resident's foreign interest/dividends (12(2)); use-in-Zimbabwe of IP (12(4)); recoupments (12(5)); and the digital rules (12(6)–(8)).
• Section 10 is timing/attribution (accrual on entitlement; partnership transparency; minor-child and settlement attribution), not a source rule — keep the two apart.
• Residence widens the net for residents only in the closed list of Sections 12(1)(c), 12(2), 12(3) (plus 12(1)(d)). There is no worldwide-income charge.
• Company residence = central management and control (substance, not incorporation; De Beers 1906). A "foreign company" is one ordinarily resident elsewhere.
• Non-resident companies: taxed under Section 19A only if they have a Section 19B permanent establishment, and then only on PE-attributable income computed on a separate-enterprise arm's-length basis; otherwise only on actual Zimbabwean-source income (often via withholding).
• Permanent establishment (Section 19B) = a fixed place of business (incl. a branch, office, factory, mine, or building/construction site) or a dependent agent habitually concluding contracts, with independent-agent and preparatory/auxiliary carve-outs and a >50% "closely related" test.
• Digital operators (Sections 12(6)/(7), 12A): a foreign satellite/e-commerce operator is taxed at 5% (Finance Act Section 14(2)(k)) on Zimbabwean revenue once it exceeds US$500,000; the PE rules are disapplied.
• Rates (YA 2025): companies/trusts 25% (Finance Act Section 14(2)(c)); individuals up to 40% above US$36,000; plus the AIDS Levy surcharge. Always state the year of assessment — rates are set annually by the charging Act.
• DTAs (Sections 91–93) overlay the domestic rules: charge first, relieve second. Treaties reduce source-country tax, raise the PE threshold and provide residence tie-breakers (see the Double Taxation Agreements lesson).

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Table 1 — Source-based vs residence-based systems (and where Zimbabwe sits)

Feature	Pure residence (worldwide) system	Pure source (territorial) system	Zimbabwe (source + residence extensions)
Primary connecting factor	Residence of the taxpayer	Source of the income	Source (Section 8(1))
Resident's foreign income	Taxed	Not taxed	Generally not taxed, except the closed list (Sections 12(1)(c), 12(2), 12(3), 12(1)(d))
Non-resident's local income	Taxed	Taxed	Taxed (actual source, deemed source, or PE under Section 19A)
Role of residence	Decisive	Minor	Secondary — switches on specific deeming rules; decisive for company basis of charge
Double-tax relief	Foreign tax credits	Less needed	Credit method, Sections 91–93 / DTAs

Table 2 — Resident vs non-resident: how each is taxed

Taxpayer	Zimbabwean-source income	Foreign-source income	Governing rule
Individual ordinarily resident	Taxed	Taxed only if deemed-source under Section 12(1)(c)/(2)/(3)/(1)(d)	Section 8(1); Section 12
Individual not ordinarily resident	Taxed (actual or deemed source)	Not taxed	Section 8(1); Section 12
Resident company (central management & control in Zimbabwe)	Taxed	Taxed where deemed-source	Section 8(1); Section 12; Section 2 def
Non-resident company with PE	Taxed on PE-attributable income	Taxed if attributable to the PE	Section 19A / Section 19B
Non-resident company without PE	Taxed only on actual Zimbabwean-source income (often by withholding)	Not taxed	Section 19A; Section 12; Parts on withholding
Foreign digital operator (>US$500k)	5% of Zimbabwean revenue	n/a	Section 12(6)/(7), Section 12A; FA Section 14(2)(k)

Table 3 — The Section 12 deemed-source catalogue

Provision	Amount deemed Zimbabwean-source	Key condition
Section 12(1)(a)	Proceeds of a contract of sale of goods	Contract made within Zimbabwe (delivery location irrelevant)
Section 12(1)(b)	Service/work income	Trade carried on in Zimbabwe (payer residence & place of payment irrelevant)
Section 12(1)(c)	Foreign employment income	Employee ordinarily resident; absence ≤ 183 days aggregate; "employee" includes a director
Section 12(1)(d)	Services rendered to the State	Inside or outside Zimbabwe, subject to the proviso
Section 12(1)(e)	Pensions/annuities for services	With apportionment/exclusion provisos
Section 12(2)	Foreign interest & dividends on securities	Recipient ordinarily resident in Zimbabwe
Section 12(3)	Foreign annuity acquired by purchase	Annuitant ordinarily resident when right acquired
Section 12(4)	Use in Zimbabwe of IP / imparting of knowledge	Use/connection in Zimbabwe (royalty source rule)
Section 12(5)	Recoupments under Section 8(1)(i)/(j)	Even if recovered/recouped outside Zimbabwe
Section 12(6)/(7)	Satellite broadcasting / e-commerce revenue	Operator domiciled outside Zimbabwe, customers resident in Zimbabwe

Diagram — Determining the Zimbabwean source/charge

flowchart TD
 A[Amount received or accrued in the year] --> B{Proved to be of a capital nature?}
 B -->|Yes| C[Outside gross income; consider Capital Gains Tax]
 B -->|No| D{Does a Section 12 deeming rule apply?}
 D -->|Yes| E[Zimbabwean source: include in gross income]
 D -->|No| F{Common-law source within Zimbabwe?}
 F -->|Yes| E
 F -->|No| G{Taxpayer a non-resident company?}
 G -->|Yes, has Section 19B PE| H[Tax PE-attributable income under Section 19A]
 G -->|Yes, no PE| I[Tax only actual Zim-source income or withholding]
 G -->|No| J[Outside the Zimbabwean charge]
 E --> K{DTA with the other state?}
 H --> K
 K -->|Yes| L[Apply treaty: reduce rate, tie-breaker, PE threshold]
 K -->|No| M[Apply domestic rate; relief by credit Section 92/93]

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Statutes & sections (Income Tax Act [Chapter 23:06], unless stated)

• Section 2 — interpretation; "company" includes any association wheresoever incorporated; "foreign company" = body corporate ordinarily resident outside Zimbabwe; company deemed ordinarily resident where its central management and control is situated.
• Section 8(1) — definition of "gross income"; the "source within or deemed to be within Zimbabwe" gateway; capital exclusion.
• Section 10 — income deemed to have accrued (capitalised/credited/due-and-payable amounts); 10(2) partnership attribution; 10(3)–(6) minor-child/settlement anti-avoidance; 10(7) amounts payable after year-end.
• Section 11 — income from assets in deceased and insolvent estates (ascertained beneficiary; estate attribution).
• Section 12 — deemed Zimbabwean source: 12(1)(a) sale contracts made in Zimbabwe; 12(1)(b) services carried on in Zimbabwe; 12(1)(c) foreign employment income during temporary absence (≤183 days; "employee" includes director); 12(1)(d) State services; 12(1)(e) pensions/annuities; 12(2) foreign interest/dividends of ordinarily resident persons; 12(3) foreign purchased annuity; 12(4) use in Zimbabwe of IP; 12(5) recoupments; 12(6)–(8) satellite/e-commerce deeming and definitions.
• Section 12A — taxation of Section 12(6)/(7) digital income; US$500,000 threshold (12A(2)); rate per Finance Act Section 14(2)(k); 12A(4) disapplies Sections 19A/19B; 12A(5) representative taxpayer.
• Section 19A — non-resident company taxed only on income attributable to a Zimbabwean permanent establishment; separate-enterprise arm's-length computation (inserted FA (No. 2) 2017, w.e.f. 1 January 2017).
• Section 19B — meaning of "permanent establishment": fixed place of business (incl. building/construction site); dependent agent habitually concluding contracts; independent-agent and preparatory/auxiliary carve-outs; >50% "closely related" test.
• Sections 91–93 — DTA relief and foreign-tax credit (the credit method); engaged after the domestic charge (see DTA lesson).

Finance Act [Chapter 23:04]

• Section 14(2)(c) — company/trust rate 25% (YA 2025).
• Section 14(2)(k) — foreign satellite-broadcasting / e-commerce operator rate 5% (confirmed in the 27 May 2025 source Finance Act).
• Individual rate scale to 40% above US$36,000 (YA 2025 USD tax tables).

Case law

• Ka. v CoT 93-SC-001 (Zimbabwe, SC) — source of service income carried on in Zimbabwe (annotated to Section 12(1)(b)).
• T M Fee' v COT 91-ITC-1535 (Zimbabwe) — use-in-Zimbabwe of IP / imparting of knowledge (annotated to Section 12(4)).
• PPC v ZIMRA 19-HH-755 (Zimbabwe, HH) — foreign interest/dividends of ordinarily resident persons (annotated to Section 12(2)).
• BAT v Commissioner of Taxes 94-HH-001 (Zimbabwe) — foreign company / associated-enterprise characterisation (annotated near the "foreign company" definition).
• Mota Engenharia 22-SC-115 (Zimbabwe, SC) — taxation of a non-resident on Zimbabwean-source service income.
• CIR v Lever Brothers & Unilever Ltd 1946 AD 441 (South Africa, non-binding) — source = originating cause and its location.
• Cohen v CIR 1946 AD 174; CIR v Kuttel 1992 (3) SA 242 (A) (South Africa, non-binding) — meaning of "ordinarily resident".
• De Beers Consolidated Mines Ltd v Howe 1906 5 TC 198 (UK, non-binding) — company residence = central management and control.

ZIMRA guidance

• 2025 USD and ZiG tax tables (rate bands, year of assessment). Form guides (ITF 12C self-assessment) for the administrative layer where a return is involved.

DTAs / international

• Zimbabwe's DTAs are given force under Sections 91–93; the country list and treaty-specific rates/PE durations live in the regulations to the Act and the individual treaties (see the Double Taxation Agreements lesson).