Republic of Zimbabwe

Zimbabwe’s income tax system is governed by the Income Tax Act [Chapter 23:06] and employers play a central role in its administration through the Pay As You Earn (PAYE) system. The tax system is based on a progressive structure where individuals are taxed at increasing rates, ranging from 0% to 40%, based on their income levels. PAYE continues to apply to earnings in both the local currency (ZWG/ZiG) and foreign currency (USD). Monthly tax-free thresholds are generally aligned to approximately USD 100 for foreign-currency remuneration and ZiG 2,800 for local-currency remuneration. The ZiG threshold is a separately prescribed statutory amount, not an exchange-rate equivalent of USD 100. Employers are required to deduct PAYE tax from employees’ salaries and remit this to the Zimbabwe Revenue Authority (ZIMRA) on a monthly basis. An additional AIDS levy of 3% is applied to the PAYE amount. Both employers and employees contribute to the National Social Security Authority (NSSA). Since January 2025, employers must use ZIMRA’s Employee Management Module (EMM) to register employees. The system allocates Taxpayer Identification Numbers (TINs) to newly registered employees and enables employers to declare employee earnings and submit PAYE and AIDS levy contributions electronically.

Payroll taxes consist primarily of PAYE income tax, together with the AIDS levy calculated on the employee’s PAYE liability and social security contributions. Taxpayers may be eligible for various credits, including those for elderly, blind or disabled individuals, as well as for medical expenses, subject to statutory limits. Non-cash benefits such as company vehicles, subsidised housing and employer-paid school fees are also considered taxable. Both employers and employees are required to contribute to the NSSA at prescribed rates, subject to an insurable earnings ceiling that is reviewed periodically by the NSSA. Currently, the Pension and Other Benefits Scheme (POBS) contribution is 4.5% by the employee and 4.5% by the employer, subject to an insurable earnings ceiling of USD 700 or its ZiG equivalent calculated at the prevailing official interbank exchange rate. These contributions fund benefits such as pensions and retirement, invalidity, survivors’ and funeral benefits. Employers must also comply with other statutory deductions, including a 1% levy on total gross payroll to the Zimbabwe Manpower Development Fund (ZIMDEF) and monthly premiums to the Accident Prevention and Workers’ Compensation Scheme (APWCS), calculated based on their total wage bill and the risk classification of their industry. While there are no statutory health or unemployment insurance schemes, employers may opt to provide such benefits privately. Specified or otherwise eligible employers may also be liable for levies to the Standards Development Fund (SDF), which is typically based on the employer’s total remuneration/wage bill, currently at 0.5%, and payable to the SDF within the Ministry of Industry and Commerce.

Tax reporting and payment deadlines are structured around monthly and annual cycles. Employers must remit and report PAYE deductions and the 3% AIDS levy monthly by the 10th of the month following salary payment, using ZIMRA’s TaRMS Self-Service Portal and its EMM. The EMM is used to register employees, maintain employee data, declare earnings and automatically generate PAYE liabilities. Annual income tax returns for individual taxpayers, including employees falling under the Non-Final Deduction System (Non-FDS) must be submitted by 30 April for the preceding tax year, while employers are no longer required to submit the annual ITF16 return. Instead, employers must reconcile each employee’s PAYE position in December and process any adjustment through the final December payroll. Zimbabwe’s tax system requires separate tracking and reporting of salaries paid in ZiG and USD. While both currencies are permitted under the multi-currency regime, inconsistent treatment or mixing of currencies within payroll processes may create compliance complexities under exchange control and tax reporting requirements. NSSA contributions must be remitted in accordance with NSSA regulations, along with any applicable premiums under the APWCS, which vary based on the employer’s industry risk classification. The 1% ZIMDEF levy on gross payroll must be remitted to the ZIMDEF, administered by the Ministry of Higher and Tertiary Education.

Employers in Zimbabwe are legally required to maintain accurate and comprehensive payroll and employee records in compliance with multiple laws, including the Labour Act, Income Tax Act, NSSA regulations and the Manpower Planning and Development Act. Employers must maintain accurate and up-to-date records of all employee earnings, deductions, benefits and tax payments. This includes detailed payroll reports, payslips, employee contracts specifying the currency of remuneration (ZiG or USD), working hours, leave, termination details and documentation of fringe benefits valued in the currency in which they are provided. The minimum retention period is generally six years for tax purposes, including payroll schedules and employee information. The Labour Act separately requires records of remuneration and time worked to be retained for at least three years; longer periods may apply under other legislation or sector-specific requirements. Failure to comply with these requirements may result in penalties, including daily civil penalties for late submission of returns, percentage-based penalties of up to 100% of unpaid tax, and interest charges on overdue amounts.