Zimbabwe 2019 National Budget: KPMG highlights key changes


The Honourable Mthuli Ncube, Minister of Finance and Economic Development, presented the 2019 National Budget on Thursday, 22 November 2018. The theme of the 2019 National Budget is “Austerity for Prosperity.”

KPMG summarised some key changes from the 2019 Budget Statement. Spiked Online Media summarises some of the changes as provided by KPMG as shown below:

Revenue measures

  • Clarification of tax exemption on interest income earned on treasury bills
  • Amendments to the 2% IMTT exemptions list
  • Deemed taxable income for satellite broadcasting services and electronic commerce platform providers
  • Reduction in employment tax rates
  • Extension of joint and severally liable tax obligations for directors in certain circumstances
  • Revision of duties and extension in rebates in the productive sectors
  • Publication of tax penalty loading model
  • Payment of taxes in underlying currency
  • Increase in excise duty for fuel and cigarettes
  • Payment of duty in foreign currency for specified goods including motor vehicles
  • Requirement for filing annual transfer pricing return and documentation
  • Amendment of definition of time of supply which will result in earlier payment of VAT

Controlling expenditures

  • 5% reduction in basic salaries of senior civil servants
  • 13th cheque to be restricted to basic salary
  • Rationalisation of foreign service missions
  • Retirement of the youth officers
  • Introduction of biometric register for civil servants in 2019
  • Privatisation of parastals
  • Management of government vehicle fleet

Currency /Macro economic

  • Gradual movement towards a more efficient and optimal foreign currency allocation including establishment of a foreign currency committee
  • Large scale gold miners to retain 55% of foreign currency earned
  • Two Bilateral Investment Promotion and Protection Agreements (BIPPA) awaiting signature and twenty two BIPPAs under negotiation


Transfer Pricing

“Requirement for filing annual Transfer Pricing return and documentation”

With effect from 01/01/19 transfer pricing changes proposed include the following:

  • The requirement to file an annual transfer pricing related return.
  • ZIMRA to provide guidelines for transfer pricing documentation requirements.
  • Penalties for noncompliance with transfer pricing legislation are:
  • – 10% of the shortfall tax liability where taxpayer was in compliance with 35th schedule and contemporaneous transfer pricing documentation.
  • – 30% of shortfall tax liability on noncompliance with 35th schedule or nonexistence of contemporaneous transfer pricing documentation.
  • – 100% of shortfall tax liability on tax evasion and deliberate postponement of tax liability where no transfer pricing document exist.

Voluntarily wound up companies

  • With effect from 01/01/19, where companies are voluntarily wound up to avoid the payment of taxes, it is proposed that the directors be jointly and severally liable for tax liabilities.

Interest accruing from Treasury Bills

“The receipts and accruals of financial institutions in the form of income from treasury bills which were issued specifying that there are tax free are exempt from income tax.”

Satellite Broadcasting Services and Electronic Platform Service Provider

“Deemed taxable income for foreign satellite broadcasting services and electronic commerce platform providers”

  • With effect from 01/01/19, any amount receivable, by or on behalf of either a satellite broadcasting service or an electronic commerce platform located outside Zimbabwe, from a person resident in Zimbabwe is deemed to be from a source within Zimbabwe and will therefore be subject to tax in Zimbabwe.
  • A satellite broadcasting service provider or any person who delivers goods or services through an electronic commerce platform in receipt of revenue in excess of an annual amount to be specified by the Minister shall be required to appoint a public officer resident in Zimbabwe and register with ZIMRA for tax purposes

Withholding tax on contracts and tenders

  • Exemption from withholding tax on contracts for schools that have accumulated arrears from failure to withhold tax for a period of six years ended 31/12/17.
  • Exempting the Reserve Bank of Zimbabwe from the requirement of administering withholding tax on contracts in relation to interest payments accruing from Treasury Bills during the period of 01/02/09 to 30/11/18.
  • Exemption on withholding of 10% for payments to nonresidents.


  • With effect from 01/01/19, the definition of the capital expenditure has been extended to clarify that capital expenditure claimed must be in respect of two or more mining locations which are held by same taxpayer and ZIMRA is satisfied that the mining operations conducted are inseparable or interdependent where minerals produced at these locations are part of integrated process of beneficiation under the control of the taxpayer.

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Byron Adonis Mutingwende