Emmerson Njanjamangezi, Group Features Editor 
THE Zimbabwe Revenue Authority (Zimra) must tax remote income at a lower flat rate to encourage voluntary compliance for people working for companies not resident in Zimbabwe, a local tax expert has said.
In a presentation at the Tax Matrix School, 2022 mid-term fiscal budget review last week, Trendset Tax and Advisory managing director David Masaya said there was a surge in numbers of locals taking up jobs from companies abroad and executing their duties virtually.
“To foster compliance for such people, another view would be for fiscal authorities to tax such income at a lower flat rate to encourage more compliance.
Regina Chinamasa, acting ZIMRA Commissioner General
“We encourage remote workers to consult and be aware of the tax implications. In order to avert recoveries of tax in the future, potential penalties and interest,” he said.
This comes as Zimra’s focus this year will be to expand its revenue base by targeting the informal sector.
The tax authority targets to intensify the implementation of various compliance strategies that ensure timely and accurate tax remittances from different segments.
Persons working in the capacity of employees from Zimbabwe for employers who are not resident in the country may be taxable locally because our tax legislation is source based.
Though the concept of remote working may be considered recent or new, the circumstance is already catered for by our existing tax laws.
The source of a salary is the services that the employee renders to the employer and the location has been held in past decided court cases to be the place where the employee performs the services from.
An employee’s principal place of work is usually the place where he spends most of his working time.
“The only or one of the few times that the salary may escape taxation in Zimbabwe is where the services carried out whilst in Zimbabwe are considered to be of incidental nature to those that are carried out from elsewhere.
“Where an individual working from Zimbabwe for an offshore employer is found to be taxable locally, the foreign employer is obligated to register for employees’ tax in Zimbabwe through a local representative,” he added.
Masaya said the representative is required to carry out responsibilities pertaining to the administration of employee tax, that’s withholding and remitting plus the submission of relevant returns.
“Failure to do so exposes the foreign employer to recovery by Zimra of the PAYE, potential penalties of up to 100 percent, and interest for the late payment of the tax.
“… Zimra can have further recourse with the individual employee. This is so because any individual who earns remuneration from which employees’ tax is not withheld is obligated to file a personal income tax return after the end of the tax year as well as to pay the tax resulting from filing such a return,” he further said.
Masaya said some foreign employers may enter into contracts with Zimbabwe-based employees with clauses that remove the obligation to withhold employees’ tax from the foreign employer on the basis that the local employee will take full responsibility for the local taxes.
However, he said such contracts do not absolve the foreign employer of its tax responsibilities in Zimbabwe.
