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Payment of Pay As You Earn (PAYE) in foreign and local currency

Zimra advises its valued clients that Section 4A of the Finance Act (Chapter 23:04) states that a person whose taxable income from employment is earned in whole or in part in a foreign currency shall pay tax in the same or another specified foreign currency on so much of that income as is earned, received or accrued in that currency.

In line with these provisions, clients are hereby reminded that where remuneration is paid in foreign currency, the PAYE arising from this income should be in foreign currency.

What is Remuneration

Remuneration means any amount of income which is paid or payable to any person by way of any salary, leave pay, allowance, wage, overtime pay, bonus, gratuity, commission, fee, emolument, pension, superannuation allowance, retiring allowance, stipend or commutation of a pension or an annuity, whether in cash or otherwise and whether or not in respect of services rendered.

Advantages and benefits granted to an employee, spouse or child form part of remuneration. The following are the advantages and benefits that form part of remuneration:
-board or occupation of quarters or residence,

-use of company furniture or motor vehicle,

-use of or enjoyment of any other property, loans, school fees benefit, any allowance

-and passage benefit.

2021 Forex and Local Currency Tax Tables Highlights

For the year 2021, there are separate Paye Tax Tables for Foreign Currency (USD) and Local Currency (ZWL$). The currency of remuneration determines the Tax Table to be used by the taxPayer.

Highlighted below are quick insights of the USD and ZWL$ tax tables:

-Foreign Currency (USD) Tax Tables for 2021 remained the same as year 2020

-Tax Free Threshold remains at USD840 per annum or USD70 per month

-Exempt Bonus USD320 per annum

-Zimbabwean Dollar (ZWL$) Tax Tables for 2021 have been amended

-Tax Free Threshold is now ZWL$120 000,00 per annum or ZWL$10 000 per month

-Exempt Bonus is now ZWL$25 000 per annum

Calculation of Paye
-Determine the gross income by adding up basic salary and allowances (remuneration)

-Deduct exempt income and allowable deductions (exempt income includes bonus whilst allowable deductions include contributions to a pension fund).

-Determine taxable income and rate of tax applicable as per Paye tables on the following link below

-Calculate PAYE.

-Add Aids Levy at 3 percent to come up with the tax due

Calculation of Paye where one earns in USD and ZWL

Convert remuneration earned in RTGS Dollars to foreign currency at the prevailing Interbank rate;

-Add the remuneration determined above, to the remuneration earned in foreign currency to get total remuneration.

-Deduct allowable deductions to obtain the taxable amount. Deductions earned in RTGS$ should also be converted to foreign currency.

-Calculate Paye in foreign currency using the foreign currency tax tables.

-Subtract the credits to determine the Paye payable. Any credits earned in RTGS$ should be converted to foreign currency using the prevailing interbank rate as at date of running the payroll.

-Compute tax payable in foreign currency and in RTGS proportionately.

Clients are kindly advised to take note of the following issues:

-TaxPayers can take advantage of the voluntary disclosure facility and make a full declaration of taxes previously omitted in tax returns and any business malpractices previously employed.

-All PAYE returns (P2 forms) should be completed in full and submitted through the Zimra e-services platform (http://efiling.Zimra.co.zw).

-All payments should be done on time through banks. Refer to the following link on Zimra website for Zimra Bank Accounts details: https://www.Zimra.co.zw/profile/2037-Zimra-bank-accounts

Covid-19 is real. Always remember to sanitise, wash your hands with water and soap. Stay safe.

My Taxes, My Duties: Building my Zimbabwe!!

-This article was compiled by the Zimbabwe Revenue Authority for information purposes only. Zimra shall not accept responsibility for loss or damage arising from use of material in this article and no liability will attach to the Zimbabwe Revenue Authority.-chroncielc.o.zw

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