Zimbabweans earning ZWL$2 000 or less will from next year be exempted from paying any taxes attached to their incomes following the upward review of the tax-free threshold by Finance and Economic Development Minister, Mthuli Ncube, Thursday.
The tax-free threshold currently pegged at ZWL$ 700 per month, was last reviewed in August 2019 while wages and salaries have since been reviewed in line with economic developments, resulting in bracket creep.
“I, therefore, propose to review the tax free threshold from ZWL$ 700 to ZWL$ 2 000 per month and adjust the tax bands to begin at ZWL$2 001 and end at ZWL$50 000, above which the highest marginal tax rate of 40 percent will apply, with effect from 1 January 2020,” said Ncube while presenting his 2020 national budget.
“This will provide relief to taxpayers and boost aggregate demand for goods and services.”
Ncube further proposed to review the tax free bonus from ZWL$ 1 000 to ZWL$ 5 000, with effect from 1 November 2019.
He added: “Mr Speaker Sir, most retrenchees are unable to secure employment, hence engage in self-help projects to support their livelihood using retrenchment packages as seed capital. Some of these self-help projects have transformed from micro to small and medium enterprises, hence have become the mainstay of the economy.”
Ncube said in order to safeguard the value of retrenchment packages, he reviewed the non-taxable portion of the retrenchment package from ZWL$10 000 to ZWL$50 000 or one-third of the package, maximum of ZWL$80 000, with effect from 1 January 2020.
The Finance Minister also reduced Value-Added-Tax from 15 percent to 14.5 percent.