Tax relief for Zimbabweans as govt raises monthly ...

Tax relief for Zimbabweans as govt raises monthly threshold

Nyashadzashe Ndoro

ZIM NOW REPORTER

Zimbabweans earning below ZiG1 356 will no longer pay income tax, a move by the government to cushion them from the sharp depreciation of the recently introduced Zimbabwean currency, the ZiG.

The tax-free threshold, which was previously set at ZWL$750 000, had become inadequate due to the significant decline in the value of the ZWL against the US dollar. By the end of the first quarter of 2024, the ZWL$750 000 threshold translated to a mere US$28.39, far below the cost of living.

This drop was substantial considering that at the beginning of the year, the ZWL$750 000 threshold was equivalent to nearly US$74. To address this disparity, the Minister of Finance, Economic Development and Investment Promotion, Mthuli Ncube, issued Statutory Instrument (S.I.) 74 of 2024.

The new SI stipulates that the monthly tax-free income tax threshold is now ZiG1 356, which is roughly equivalent to US$100. This figure is derived from the annual tax-free threshold of ZiG12 204 as outlined in the SI, applicable from April 5, 2024 to December 31, 2024.

The SI also introduces a tiered tax structure for those earning above the tax-free threshold. Individuals earning between ZiG12 204.01 and ZiG36 612 will be subject to a 20% income tax rate. The tax rate rises to 25% for those in the ZiG36 612.01 to ZiG122 040 tax bracket.

Those earning between ZiG122 040.01 and ZiG244 080 will be taxed at a rate of 30%, while income exceeding ZiG244 080.01 but below ZiG366 120 will attract a 35% tax rate. The highest tax bracket of 40% applies to incomes exceeding ZiG366 120.

In simpler terms, the monthly tax brackets translate to ZiG1 356.01 to ZiG4 068 for the 20% tax band. Income between ZiG$4 068.01 and ZiG13 650 will be taxed at 25%, while earnings between ZiG13 650.01 and ZiG27 120 will fall under the 30% tax bracket. The 35% tax rate applies to monthly income exceeding ZiG27 120.01 but below ZiG$40 680, with the highest tax rate of 40% applicable to earnings above ZiG40 680.01.