The Sunday News
Judith Phiri, Business Reporter
FINANCE and Economic Development Minister, Professor Mthuli Ncube has proposed a review of the tax-free threshold on local currency remuneration from ZW$300 000 to ZW$600 000 per annum, with effect from 1 August 2022.
The Tax-Free Threshold was increased to ZW$300 000 or USD1 200 per annum for remuneration earned in local and foreign currency, respectively, with effect from 1 January 2022, however, adjustments to wages and salaries in response to macroeconomic developments have resulted in bracket creep on local currency denominated remuneration.
Speaking in Parliament on Thursday while presenting the 2022 Mid-Term Budget and Economic Review and Supplementary Budget, Prof Ncube said:
“I, therefore, propose to review the Tax-Free Threshold on local currency remuneration from ZW$300 000 to ZW$600 000 per annum and also adjust the tax bands to end at ZW$12 million from the current ZW$6 000 000 per annum, above which tax will be levied at a rate of 40 percent, with effect from 1 August 2022.”
He said this measure was envisaged to increase disposable income, spur consumption spending and income for corporates. In terms of the other tax relief measures, the Minister said for the bonus tax free threshold he was also proposing to review the local currency tax-free bonus threshold from ZW$100 000 to ZW$500 000, with effect from 1 November 2022.
Prof Ncube proposed to introduce a rebate of duty on equipment for use in scientific research imported by institutions approved by Ministries responsible for Health, Mining, Agriculture and Higher and Tertiary Education.
He said: “Mr Speaker Sir, innovation and research are pillars towards sustainable development and industrialisation. The education and training system in Zimbabwe is now geared towards this initiative. In that regard, it is important that local research institutions be capacitated through infrastructure that promotes knowledge, which is adaptive and resilient to common and emerging threats such as climate change, infectious diseases and drug resistance, among others.”
Looking at the legislative amendments with focus on value added tax: input tax, the Minister propose to provide VAT registered operators with the option to pay duty in foreign currency to facilitate offsetting of output and input tax in the same currency.
He said the current legislation permits businesses to trade in either local or foreign currency and consistent with this legislative provision, VAT registered operators were compelled to account for tax in the currency of trade. “In order to assess the amount of VAT payable or refundable, output tax should be offset against input tax incurred in the same currency. This, however, creates an administrative burden for some VAT registered operators whose sales and purchases are transacted in different currencies.
“This is particularly common on foreign currency sales of imported goods and services that are liable to import VAT in local currency,” added Prof Ncube.
