Marvelous Tapera 
THE law requires an employer to withhold and remit employees tax (PAYE) in accordance with the tax deduction tables. There exists separate PAYE tax tables for foreign and ZWL$ earnings and the former tables are to be used when earnings are part or wholly in foreign currency.
The updated Finance Bill, which is yet to become law, has projected a revision of the previously proposed ZWL$ PAYE tables for the year of assessment January 1, 2022 after a scrutiny by the National Assembly, which had noted its displeasure through the debates.
The minister had tabled a Bill with the tax-free threshold pegged at $50 000 per month and has since conceded by revising this figure upwards to $75 000 per month and the rate of 40 percent applies on amounts exceeding $1 000 000 per month. The Bill has stipulated that the new rates will apply with effect from August 1, but are for a full year 2022.
Furthermore, the law makes reference to two periods in the 2022 year of assessment, thereby abandoning the previous stance of having two years of assessment in one calendar year when there is a change in the employment tax rates.
The two periods as opposed to two years of assessment dispense with the need for an ITF16 (PAYE return). An ITF 16 is linked to a year of assessment and should be filed with Zimra 30 days after the end of year of assessment.
In this case only one ITF16 for 2022-year of assessment is required 30 days after December 31, 2022.
The revised local currency PAYE tax tables portray that the tax-free threshold on local currency remuneration will be from $900 000 per annum and has also adjusted the tax bands to end at $12 million and above, which tax will be levied at a rate of 40 percent.
The question at this point would be in line with the date of effect and whether or not the legislators in their drafting imply that the new tables are for the remaining five or 12 months.
Our understanding of this particular provision would be that the law seeks to imply that the annual table is to be used on a basis of 12 months. This is so because if the proposed $900 000 is divided by 12, the threshold would be at $75 000 whilst if the same amount is presumed to be for five months the threshold will be $180 000.
Following the debates in the Hansard report, it would seem that this is highly unlikely to have been the minister’s objectives to set a high tax-free threshold like this.
The defect could therefore, lie with the legislators who could have crafted the words of the particular provisions. At this point, it is not crystal clear just how the law is expected to be for it to be well received and understood by the layman.
A good example could be a comparison of the wording in the current bill and that in Finance Act no.2 of 2019. Finance Act no.2 of 2019 clearly stated, “with effect from the period beginning August 1, 2019 and ending December 31of the year of assessment beginning on January 1, 2019”.
On the other hand, the current Bill states, “with effect from August 1 in the year of assessment beginning on January 1,2022”.
If this annual table is to be made into law, in our view it is proper for tax collected for the period January 1 to July 31, 2022 to be revised since PAYE computation is based on annual assessment, although PAYE is to be remitted to Zimra on a monthly basis. This is bearing in mind the new tables are set for the full year.
Whether or not the legislators envisage such interpretation of ours we are not sure. The provision in the Finance Act no.2 of 2019 was clear on the period from which the rates will run from and in what year of assessment. An enactment which is ambiguous kills the purpose of the law after all. This also could be a problem if the Finance Bill continues to be delayed.
The US$ PAYE tax tables, however, remain unchanged from the previous ones that had been in use. If the proposed ZWL tables are converted into US$ using the bank rate of 613 for instance, the lower-level employees are better off paid in ZWL$ whilst higher earners are relieved when paid in US$.
This is because the tax-free threshold is the equivalent of US$122 per month and the 40 percent bracket at US$1,631 equivalent per month, when in actual US$ tables it has US$100 and US$3,000 per month, respectively.
However, chances are high for a gradual shift into a multi-currency regime given the fact that many employees are being paid in both US$ and ZWL.
Another hazard that is screaming multi-currency is the pricing in the shops that have seen many shops charging in the US$ currency.
These could therefore, not hold much bearing in the market since most people will be affected by the USD PAYE tax tables.
There is a need for the local currency, which seems to have vanished from the market. Could the hint in one news story that the ministry of Finance wishes to charge some taxes in ZWL$ be true after all.
Lastly, the issue of the ZWL table can just be an academic debate after all since most employers have turned to a multi-currency payroll requiring that US$ tax tables are used. Meanwhile, Matrix Tax School invites you to take part in the upcoming Summer School from October 20-22 in Troutbeck Nyanga.
Tapera is the founder of Tax Matrix (Pvt) Ltd and the chief executive of Matrix Tax School. He writes in his personal capacity.
