Introduction
On
Thursday
28th
November,
2024
the
Minister
of
Finance,
Economic
Development
and
Investment
Promotion
presented
the
2025
budget
statement
in
the
National
Assembly. The
budget
has
a
number
of
new
tax
proposals. Most
will
increase
taxes,
but
there
are
tax
reductions
in
some
sectors
to
spur
economic
activity
and
promote
a
green
environment. Above
all
the
statement
lays
out
an
aggressive
tax
collection
stance
in
the
new
year
as
the
tax
base
shrinks. This
Watch
looks
at
the
tax
proposals.
Tax
Reductions
In
a
move
aimed
at
reducing
emissions
into
the
atmosphere
the
Government
will
reduce
customs
duty
on
electrical
vehicles
imported
into
the
country. It
will
remove
value
added
tax
(VAT)
on
liquified
petroleum
gas
(LPG)
and
reduce
the
sugar
tax
to
boost
the
drinks
manufacturing
sector. The
reduced
taxes
are:
-
Customs
duty
on
electric
vehicles
to
b
be
reduced
from
40%
to
25% -
Special
surtax
on
cordials
to
be
reduced
from
USD
0.001
per
gram
to
USD
0.0005
per
gram
of
sugar
content
in
concentrated
beverages -
VAT
on
Liquefied
Petroleum
Gas
(LPG)
to
be
removed.
Increased
Taxes
To
improve
its
revenues
the
Treasury
suggested
the
following
measures;
-
Capital
gains
tax
on
marketable
securities
to
be
revised
from
a
temporary
2%
withholding
tax
to
a
final
1%
tax
from
the
1st
January
2025. -
Excise
duty
on
alcoholic
beverages
to
be
increased
from
USD
0.25
per
litre
to
USD
0.30
per
litre,
effective
from
the
1st
January,
2025. -
Royalties
on
quarry
stones
will
be
a
flat
0.5%
of
their
sales
value.
New
Taxes
Introduced
In
an
endeavour
to
increase
the
tax
base,
Treasury
proposed
the
following
new
taxes:
-
Fast
Foods
Tax:
A
0.5%
tax
on
the
sales
value
of
fast
food
items
like
pizzas,
burgers,
and
French
fries,
effective
from
the
1st
January,
2025. -
Betting
Tax:
A
10%
withholding
tax
on
gross
winnings
of
sports
betting
punters,
effective
from
the
1st
January,
2025. -
Plastic
Carrier
Bag
Tax:
A
20%
tax
on
the
sale
value
of
plastic
carrier
bags,
to
promote
biodegradable
alternatives. -
Rental
Income
Tax:
Properties
converted
from
residential
to
business
use
will
attract
a
25%
tax
on
their
rental
income.
Other
Tax
Adjustments
-
Corporate
income
tax
on
building
societies: Receipts
from
non-mortgage
activities
by
building
societies
will
now
be
taxed. -
Degree
of
export
orientation
for
Special
Economic
Zones
(SEZs)
will
be
reduced
from
100%
to
80%,
while
tax
holidays
for
SEZs
will
be
replaced
with
a
15%
corporate
income
tax
rate.
Aggressive
Tax
Collection
The
Treasury
has
been
disturbed
by
low
and
late
revenue
collection
in
an
environment
where
inflation
is
high,
and
has
decided
to
reduce
the
days
within
which
companies
that
collect
VAT
have
to
remit
it
to
ZIMRA. To
improve
the
situation,
the
Minister
proposes
the
following:
-
Mandatory
Tax
Registration
for
Emerging
Sectors:Certain
business
categories
like
car
dealers
and
hardware
operators
must
register
for
taxes,
failing
which
specific
quarterly
corporate
tax
payments
are
mandated. -
Changes
to
VAT
Payment
Deadlines:VAT
remittance
deadlines
to
be
reduced
from
25
days
to
15
days
after
collection. -
Reduced
Interest
Rate
for
Local
Currency
Revenue
Remittances:Adjusted
from
200%
to
the
Bank
Policy
Rate
plus
5%.
Conclusion
It
is
clear
from
the
growing
budget
deficit
that
the
Treasury
has
been
struggling
to
raise
revenue.
To
remedy
this,
the
Minister
proposes
a
cocktail
of
interventions. However,
the
Finance
Bill
still
has
to
pass
the
National
Assembly,
and
once
it
is
passed
it
will
be
interesting
to
see
how
far
the
new
measures
are
complied
with
in
our
ailing
economy.
Veritas
makes
every
effort
to
ensure
reliable
information,
but
cannot
take
legal
responsibility
for
information
supplied.
Post
published
in:
Business