Capital gains tax rate slashed to 2% on listed sec...

Capital gains tax rate slashed to 2% on listed securities

Nyashadzashe Ndoro

Chief Reporter

The Zimbabwe Stock Exchange has announced changes to the capital gains tax regime, effective immediately.

ZSE believes the changes are aimed at promoting investment and stimulating economic growth.

The key changes include a reduction in the capital gains withholding tax rate from 5% to 2% on listed marketable securities. This means that investors will now pay a final tax of 2% on the sale of listed securities, effective immediately.

Furthermore, the capital gains tax exemption has been extended to listed marketable securities for a period of six months, effective from June 28, 2024, to December 28, 2024. This means that investors will not be liable to pay capital gains tax on trades executed during this period.

The changes are part of the government's efforts to promote investment and stimulate economic growth.

The ZSE Chief Executive Officer, Justin Bgoni, welcomed the changes, stating that "these amendments will go a long way in promoting investment and stimulating economic growth. We are confident that these changes will have a positive impact on the market and encourage more investors to participate."

The changes are effective immediately, and investors are advised to consult their tax advisors to understand the implications of the changes on their investments.

In terms of the regulations, the Minister of Finance, Economic Development and Investment Promotion Mthuli Ncube has made the following changes:

Repealed paragraph (a)(iii) of section 38 of the Finance Act, which dealt with the rates of capital gains tax.

Amended section 39 of the Finance Act by repealing paragraph (a) and substituting it with a new paragraph that sets the capital gains withholding tax rate at 2% of the sale price for listed marketable securities.

ZSE says: "For the avoidance of doubt, capital gains withholding tax shall be a final tax on listed marketable securities at a rate of 2% of the sale price for a period of six months from date of publication.

"No capital gains tax would be applicable during the six months assessment period.”