What is Capital Gains Withholding Tax?

Capital Gains Withholding Tax is a tax withheld from any capital gain arising from the disposal of a specified asset. Specified asset means immovable property (e.g. land and buildings) and any marketable security (e.g. debentures, shares, unit trusts, bonds and stock).

Who should withhold the Capital Gains Withholding Tax?

A depositary is responsible for withholding and remission of the tax before the transfer of any amount he holds to the seller after the sale or transfer of a specified asset.

Depositary includes: Conveyancer, legal practitioner, estate agent, building societies, Sheriff or Master of the High Court, stockbroker or financial institution who holds the whole or part of the price paid or payable to the seller in respect of the specified asset.

Rates of Withholding Tax

These are tabulated as follows:

 

Description of Specified  Asset

Period

Rate of tax

Sale of listed securities

Prior to 31 July 2009

5% of the sale price.

Sale of listed securities

From 1 August 2009

1% of sale price

Sale of non- listed  securities

Prior to 1 September 2010

10% of sale price

 

Sale of non-listed securities

From 1 October 2010

5% of sale price

Sale of immovable property purchased prior to 1st February 2009

1st February 2009  and prior years

5% of the sale price (this tax becomes  the final tax for Capital Gains Tax purposes)

Sale of immovable property purchased and sold  after  1st February 2009

1st February 2009 and subsequent years

15% of the sale price.

 

 

 

 

When should the tax be remitted?

 

A depositary should pay the amount withheld to the Commissioner General of ZIMRA no later than the 3rd working day from the date when the payment was made or within such further time as the Commissioner General of ZIMRA may for good cause allow.

Exemptions to Capital Gains Withholding Tax

No capital gains withholding taxes should be deducted in respect of the following:

ü  Receipts and accruals  from sale of specified assets of exempt bodies such as local authorities, Zambezi River Authorities, Post Office Savings Bank, building societies,  Institutions and Societies or  Associations organized and operated solely for social welfare and not operating for the private benefit of the members.

ü   Receipts or accruals on the realization or distribution by the executor of a deceased estate of a specified asset forming part of such estate;

ü  Receipts or accruals on the sale of any marketable security being any bond or stock in respect of any loan to the State owned companies; a local authority; a statutory corporation;

ü  Receipts or accruals on the sale, by a person carrying on life insurance business

ü  Receipts or accruals on the sale of any shares in the Zimbabwe Development Bank established

ü   Receipts or accruals on the sale by a petroleum operator, approved by the Minister of Energy and Power Development

ü   The receipts and accruals of a licensed investor from the sale of a specified asset forming the whole or part of the investment to which his investment license relates.

ü   The receipts and accruals of an industrial park developer from the sale of a specified asset that forms part of or is connected with his industrial park.

ü   Amounts received by or accruing to an employee from the sale or disposal of his shares or interest in an approved employee share ownership trust where such sale or disposal is to the trust.

ü   Amounts received by a person on the sale of his or her principal private residence if such person was, on the date of the sale of or over the age  of fifty-nine years

ü   Amounts received  by or accruing to a person who is of or over the age of fifty-nine years on the sale of any marketable security

ü  In cases where a client has produced a Capital Gains Tax clearance certificate from ZIMRA that they qualify for tax exemption.

ü

When is a tax clearance certificate issued?

A Capital Gains Tax clearance certificate can be issued by ZIMRA upon submission of documentary proof to confirm that Capital Gains Tax has been paid or the client qualifies for exemption status as detailed above.

Our valued clients are hereby informed that no fee is charged for the issuance of the Capital Gains Tax clearance certificates. You are therefore encouraged to report to the police or ZIMRA offices, any incidents of people purporting to be ZIMRA officers and charging money or any such fees for obtaining this document.

Reminder for PAYE Tax Payment

Our valued clients are hereby informed that the PAYE for February 2013 is due and payable on or before the 10th of March 2013.

Paying taxes and duties on time and in full contributes towards the economic development of our nation Zimbabwe.