Marvelous Tapera 
THE Zimbabwean tax system is based on the source plus concept. This makes residents liable to tax on their income for services rendered in Zimbabwe, despite the contract being signed elsewhere or the remuneration being paid from a source outside Zimbabwe.
Residents who are however on temporary assignment outside Zimbabwe are deemed by section 12(1)(c) of the Income Tax Act to be rendering services in Zimbabwe for the duration of that assignment provided the assignment is for a period not longer than an aggregate of 183 days, which is a period of temporary absence in a year of assessment.
This applies to employees and directors alike who have physically rendered services outside Zimbabwe for a period or periods not exceeding 183 days in a year of assessment. In spite of this, income for days physically rendered in Zimbabwe is taxable even if one has only worked for a day.
Income received by a resident who renders services for the state in or outside Zimbabwe is deemed to be from a source within Zimbabwe. This does not cover income of a non-resident who renders services for the Zimbabwean government in his home country e.g. a South African resident who renders services for the Zimbabwean Embassy in South Africa.
The 183-day exemption does not apply to Zimbabwean government employees because they are deemed at all times to be rendering services in Zimbabwe. A person who renders services abroad and pays tax is however entitled to tax relief in terms of the Zimbabwean tax laws to relieve him or her of the double taxation that may be imposed by the two countries.
As stated above, the source is the basis of Zimbabwean taxes, so expatriates or non-residents who render services in Zimbabwe are liable to employees’ tax in Zimbabwe on income earned as a consequence of such services.
However, their employment income for services performed wholly outside of Zimbabwe is not subject to tax in Zimbabwe. Note that, an expatriate or a non-resident employee can be exempted from taxation in Zimbabwe if he is employed for a period less than 183 days in Zimbabwe provided there is a Double Taxation Agreement (also called tax treaty) between his home country and Zimbabwe.
Further, such income must be paid by an employer who is not a resident of Zimbabwe. Conditions required for the income to be exempted in Zimbabwe are as follows: The person must be a treaty resident, the non-resident or expatriate should render services in Zimbabwe for a period of less than 183 days in a year of assessment, the person’s remuneration should be paid by, or on behalf of, an employer who is not a resident of Zimbabwe and the receiver of this remuneration will be taxed on this income in the home country and the remuneration should not be borne by a “permanent establishment” that the non-resident employer has in Zimbabwe.
“Permanent establishment” means a fixed place of business through which the business of the employer is wholly or partly conducted. In practice, the non-resident or expatriate will be subjected to normal PAYE rules in Zimbabwe, only gets a refund of his/her employees’ tax upon leaving the country.
Therefore, before leaving Zimbabwe a foreign employee must ensure that he/she has complied with the tax laws. For this purpose, the employee should ensure that he/she has been assessed for tax purposes on the income that is taxable and that any outstanding amounts of tax have been paid.
He will then be refunded employees’ tax suffered if he meets treaty resident conditions and issued with a tax clearance certificate, which will facilitate his/her, departure from Zimbabwe.
A non-resident employee of a foreign diplomatic or consular mission holding office in a host country is exempted from paying tax in the host country, if he is stationed in the host country for the sole purpose of holding office in that country as an official of a foreign government.
If the person obtains a permit for permanent residence in Zimbabwe, the exemption falls away with effect from the date of issue of the permit. However, where a foreign government carries on business activities in Zimbabwe, the remuneration payable to its employees could also be taxable in Zimbabwe.
Zimbabwean nationals who are employed by foreign diplomatic or consular missions in Zimbabwe (i.e. locally recruited employees) are also not exempt from paying employees’ tax.
The remuneration of an employee of a foreign diplomatic or consular mission in Zimbabwe is exempt from tax in Zimbabwe if the foreign employee is stationed in Zimbabwe for the sole purpose of holding office in Zimbabwe as an official of a foreign government; and not ordinarily resident in Zimbabwe.
In the event that the employee applies for and receives a permit for permanent residence in Zimbabwe, the exemption no longer applies and liability for normal tax arises from the date of issue of such permit.
Furthermore, where a foreign government carries out business activities in Zimbabwe, the remuneration payable to its employees could also be taxable in Zimbabwe. In conclusion taxation of employees differs in Zimbabwe depending on the period spent in Zimbabwe, residence status of the employee and whether one is employed by the government or private organisation.
In conclusion it is important to understand the tax implications of each juristic person before registering with the authorities.
Meanwhile Matrix Tax School invites you to take part in the upcoming Conversion for Tax Preparers seminar on July 21 to 23 at Kadoma Rainbow Hotel and Chengeta Safari Lodge.
Tapera is the founder of Tax Matrix (Pvt) Ltd and chief executive of Matrix Tax School. He writes in his personal capacity.
