Taxation of Partnerships

What is a partnership?

A partnership is defined as a business arrangement where two or more individuals or entities collaborate to operate a business for profit. A partnership is not a legal persona; section 2 of the Income Tax Act specifically excludes a partnership from the definition of a person. As such, a partnership is not a taxpayer on its own. Partners are taxed on their share of partnership profits and on income earned from employment with the partnership.

Accrual of partnership profit:

Section 10(2) of the Income Tax Act stipulates that income received by, or accrued to, or in favour of a partnership in any period ending on an accounting date shall be deemed to be income received by, or accrued to, or in favour of the partners on such accounting date in the proportions in which the partners agree to share the profits of the partnership as at such date.

How are partnerships taxed?

Partnerships are not taxed as separate entities. Instead, they are treated as "pass-through" entities. This means that the income generated by the partnership is taxed at the individual partner level rather than at the partnership level. Each partner must include their share of the partnership's income in their personal or corporate tax returns.

Key steps in declaring profit

Determine total income: The partnership must first calculate its total income from all sources, which may include sales revenue, interest, and any other income streams.
Deduct allowable expenses: Next, the partnership can deduct allowable business expenses, such as operating costs, salaries, rent, and utilities. It’s essential to maintain accurate records of all income and expenses to substantiate these deductions.
Calculate net profit: The net profit is determined by subtracting total expenses from total income. This figure represents the profit that will be distributed among the partners.
Allocate profit to partners: Based on the partnership agreement, the net profit is allocated to each partner. Once the profit has been allocated, each partner must report their share on their personal income tax return./

What are the compliance and filing requirements for partnerships?

Partnerships must comply with several tax obligations, including:

Tax registration: Partners must register with the Zimbabwe Revenue Authority (ZIMRA) for tax purposes.
Filing returns: Each partner must file annual income tax returns, reporting their share of the partnership's income.
Payment of provisional tax: Partners may be required to make provisional tax payments based on their estimated income.

Can a partnership register for other tax obligations?

Partnerships with employees are required to apply for PAYE. Partnerships can register for VAT if they deal with the supply of taxable goods or services.

My Taxes, My Duties: Building my Zimbabwe

Taxation of Partnerships published on 04/09/2025.

Disclaimer

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.

Special Excise Duty Levied on Sale of Second-Hand Vehicles: Change of Ownership

Legislation in support of change of ownership

Section 13(1) of the Vehicle and Licensing Act states that when a registered vehicle is sold or undergoes a change of ownership, the seller or disposer must complete the ownership transfer within fourteen days from the date of sale. Subsection (2) stipulates that failure to comply with this requirement constitutes an offence, punishable by a fine not exceeding level four, imprisonment for up to three months, or both such fine and imprisonment.

Charges or fees payable on transfer of ownership

Subject to section 172BB of the Customs and Excise Act Chapter 23:02, Special Excise Duty shall be charged, levied and collected, for the benefit of the Consolidated Revenue Fund on second hand vehicles sold, transferred or otherwise disposed of to any person at such rate as may be fixed by the Charging Act i.e. Finance Act Number 13 of 2024 depending on the year of manufacture and engine size of the vehicle

Exemptions from paying Special Excise Duty

In terms of Section 172(B) of the Customs and Excise Act Chapter 23:02, no special excise duty shall be charged, levied or collected on the sale, transfer or disposal of any second-hand motor vehicle: -

(a) between companies under the same control

(b) between spouses married under the Customary Marriages Act Chapter 5:05 or the Marriage Act Chapter 5:11 or between a parent and his or her child of such a marriage

(d) to a private voluntary organization.

Currency used to pay for vehicle change of ownership

Special Excise duty is payable in currency in which the transaction was done in terms of Section 172(B) (2) of the Customs and Excise Act Chapter 23:02

Documentation required on change of ownership

Original registration book
Proof of identification for both seller and buyer
Original Proof of purchase or disposal
Proof of residence for both buyer and seller
Stamped and signed Central Vehicle Registry 4 Form (CVR)4 form which is within 14 days from date of issue
Final distribution and letter from the Master of High Court for transfer by way of inheritance
Marriage certificate for transfer between spouses
Birth certificate for transfer between child and parent of a recognized marriage union
CR14, Memorandum and Articles for transfer between companies under the same control
Letter of Authority (on letterhead) giving the company representative the mandate to sell
CMED Form AC54 for vehicles sold by the same
Mandate from owner to sell on his behalf vehicles sold by Auctioneers or Car Dealers
Certificate of Donation from the Private Voluntary Organisation.

*NB where one buys a vehicle that had not complied with requirements of Section 13(1) of the Vehicle and Licensing Act, outstanding Special Excise duty due remains due and payable before change of ownership is effected. Verifications on whether special excise duty was paid can be done at any Customs Office prior to the purchase thereof.

My Taxes, My Duties: Building my Zimbabwe.

Taxman Special Excise Duty Levied on Sale of Second-Hand Vehicles: Change of Ownership

28 August 2025.

Disclaimer

This article was compiled by the Zimbabwe Revenue Authority (ZIMRA) 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.

Temporary Import permit online (TIP)

Change of use in Capital Goods

Change of use in Capital Goods

On acquisition of capital goods, a registered operator may claim input tax on the acquired capital goods in full, in part or is denied a deduction altogether depending on the intended usage of the capital goods. Where a registered operator had claimed input tax and the actual taxable usage of the capital goods reduces or increases from the initial intended taxable usage, a VAT adjustment should be made.

1. Reduction in the taxable use of capital goods

In terms of section 17(2) of the Value Added Tax, (Chapter 23:12), where a registered operator has acquired, manufactured, assembled, constructed or imported capital goods for the making of taxable supplies, and their application for taxable purposes is reduced from the initial taxable usage, a deemed supply of the amount of the increased non-taxable usage arises, thus an adjustment is required and the registered operator must account for output tax on the amount of the increased non-taxable use.

Value of Supply

In terms of Section 9 (8) of the VAT Act, the consideration is determined using the formula:

A x (B - C); where:

represents the lesser of cost or open market value,
represents the percentage taxable usage before reduction,
represents the current percentage taxable usage of the good.

Example

In January 2024, XYZ Holdings Pvt Ltd purchased a freezit making machine valued at $2,000 including vat which was going to be used 80% taxable and 20% non- taxable and claimed input tax on that basis. By December 2024, the machine was now being used 70% taxable and 30% non-taxable. The open market value of the machine was now $1,500.

The adjustment is calculated thus, Consideration = A x (B - C) = $1,500*(80% - 70%) = $150.00. Therefore, Output tax payable = 15/115 * 150.00 = $19.57

2. Increase in the taxable use of capital goods

In terms of section 17(5) of the Value Added Tax, Chapter 23:12, where a registered operator has acquired, manufactured, assembled, constructed or imported capital goods for the making of taxable supplies, and their application for taxable purposes is increased from the initial taxable usage, an adjustment is required and the registered operator must claim additional input tax by applying the formula: A x B x (C-D); where:

represents the tax fraction,
represents the lesser of cost and open market value,
represents the current taxable usage of the goods
represents the taxable percentage prior to increase.

Example

In January 2024, XYZ Holdings Pvt Ltd purchased a freezit making machine valued at $2,000 including vat which was going to be used 80% taxable and 20% non- taxable and claimed input tax on that basis. By December 2024, the machine was now being used 95% taxable and 5% non- taxable. The open market value of the machine was now $1,500.

The adjustment is calculated thus, Input tax = A x B x (C-D) = 15/115*$1,500*(95% - 80%) = $29.35.

Time of Supply for the above-mentioned situations

In terms of Section 17 (6) of the VAT Act, any reduction or increase in the extent of the application or use of goods or services shall be deemed to take place on the last day of the registered operator’s year of assessment as defined in section two of the Taxes Act or, if the registered operator is not an income tax payer, on the last day of December.

Please note that no adjustment is necessary where the cost of capital goods excluding VAT is less than $60.00 and where reduction or increase is not more than 10%.

For additional information, visit nearest ZIMRA office or access the TaRMS portal. Compliance today avoids penalties tomorrow.

My Taxes, My Duties: Building my Zimbabwe.

Taxan Change of Use in Capital Goods Published on 5 June 2025.

Disclaimer

Verification of Online Capital Gains Tax Clearance Certificate authenticity

Compliance with the ZIMRA Fiscalisation Data Management System (FDMS)

All VAT Registered Operators are required to comply with fiscalisation requirement, to register and interface with FDMS for the purposes of recording taxable sales transactions.

To comply with this requirement, taxpayers have two options available as follows:

Upgrade existing Fiscal Devices and ensure compatibility with FDMS with the assistance of Approved Suppliers of the fiscal device. or
Consider direct interface with FDMS through Virtual Fiscal Devices (API) - software base fiscalisation solution.

Choice of the options depends on the number of point of sales operated by the taxpayer, nature of operations or accounting systems of the taxpayer or capacity to develop APIs for direct interface.

Below are the steps to take for successful on boarding:

Option A: On Boarding Process for Hardware Based Fiscal Devices

After procuring the Fiscal Device from an Approved Supplier, the Approved Suppliers will ensure that the device is tested on the FDMS platform for compatibility with both FDMS and taxpayer’s point of sale systems. The test shall be conducted on the FDMS test environment with dummy data.
The test process will generate sample output for ZIMRA approval (Fiscal Tax Invoice, Credit/Debit Note).
Close fiscal day, and check if there are no errors encountered
Submit the sample documents (Fiscal Tax Invoice, Credit/Debit Note) to ZIMRA for approval.
Upon approval by ZIMRA, through approved supplier, the fiscal device is registered in ZIMRA FDMS live platform and then transactions can be done using the upgraded fiscal device

Option B: On boarding process for Virtual Fiscalisation

Access and download the API document on the following link : https://www.zimra.co.zw/downloads/category/9-domestic-taxes?download=3807:fiscalisation-apidocumentation
Identify a software developer of your choice or internal IT personnel for assistance with API software development.
Develop your API for interface with the FDMS and configure your fiscal device
Write an email to This email address is being protected from spambots. You need JavaScript enabled to view it. , This email address is being protected from spambots. You need JavaScript enabled to view it. and This email address is being protected from spambots. You need JavaScript enabled to view it. for registration in the test environment, details of API end-points.
Conduct your API tests on the provided FDMS test platform
Generate sample invoices, credit notes and debit notes in the test environment for sending to ZIMRA for validation and approval
Close fiscal day, and check if there are no errors encountered
Submit the sample documents (Fiscal Tax Invoice, Credit/Debit Note) to ZIMRA for approval.
Once invoices are approved, registration is done in the FDMS live environment, and start transacting.

How to see if my fiscal device is compatible with the ZIMRA FDMS System

The Fiscal Tax Invoice, Debit/Credit Note printed by the fiscal device will be imprinted with verifiable QR Code.
QR code on the printed Fiscal Tax Invoice, Debit/Credit Note, if is scanned or validated on the ZIMRA FDMS Portal https://fdms.zimra.co.zw it will indicate that the “Invoice is Valid”
Fiscal day sessions can be closed and opened without any error or challenges

My Taxes, My Duties: Building my Zimbabwe

Disclaimer

PAYMENT OF TAXES IN TaRMS

What is TaRMS?

Tax and Revenue Management System (TaRMS) is a new tax administration system that ZIMRA has introduced to replace the previous system. Tax and Revenue Management System (TaRMS) is for Domestic Taxes.

What are the benefits of TaRMS in terms of payments?

TaRMS system eliminates the challenges that were encountered during payments processing in the previous system e.g. unallocated deposits
The Taxpayer transfers funds to the ZIMRA single account using his/her selected bank for tax purposes The Taxpayer submits the tax returns and the system handles payments allocations, assessments and refunds.

How does the Single Account Concept work in TaRMS?

ZIMRA have opened bank accounts in 15 banks in the country except for those that failed to meet ZIMRA requirements. These bank accounts are named ZIMRA Commissioner General Single Account. In each bank, there are two ZIMRA Single Bank Accounts, one for ZWL and another for USD. Any other foreign currencies are converted by the bank to USD at point of payment.
From the list of banks with ZIMRA Single Accounts that ZIMRA availed, the Taxpayer is expected to choose ONE BANK for Tax payment purposes. (i.e. for both ZWL and USD payments). Taxpayers cannot have a USD single account in one bank and a ZWL Single Account in another bank; they both have to be within the same bank for ease of administration.
The TaRMS system automatically keeps a balance of the Taxpayer’s funds in the ZIMRA Single Account in that bank. This record is kept in TaRMS in what is called the Taxpayer’s Single Account. The taxpayer can deposit or transfer money for tax payments only to the ZIMRA Single Account within their chosen and registered bank.
A taxpayer cannot use a bank that is not linked to ZIMRA Single Bank Account for tax payments purposes.
The Taxpayer’s bank account used to fund the Zimra Single account can be used for any other transactions as before. It is not restricted to the ZIMRA payments.
The taxpayer is allowed to change from one bank to another. To change the taxpayer’s Bank account for tax purposes, the taxpayer should send an application to ZIMRA and reset the account in the current bank, then choose the other bank with the support of a ZIMRA Single Account. The balance in the Taxpayer’s Single Account should be nil before effecting these changes.
Taxpayer has an opportunity to transfer money back from the single account to own bank account. For this transaction, the taxpayer is required to fill an online application form for the transfer. The application is automatically approved after checking set parameters. The amounts from the single account are automatically transferred to the taxpayer’s bank account within one working day.

How is the Taxpayer going to make payments in ZIMRA Single Account?

Payments into the ZIMRA Single Bank Account can be done by way of Cash deposits and internal transfers directly through Taxpayer’s bank, the bank will validate the payment before posting the transaction. The validation parameter is the Taxpayer Identification Number (TIN) and Taxpayer’s Name; hence, it is of paramount importance that the TIN is captured correctly all the time.

Are taxpayers able to make Customs payments using Single Bank Accounts?

The ZIMRA Single Bank Accounts are specifically for Domestic Taxes payments. Customs & Excise duty payments use the old ZIMRA bank accounts. In both Domestic Taxes and Customs payments, the TIN is required

Post Clearance Audit as a tool to measure and improve compliance

According to the World Customs Organisation (WCO), the Post Clearance Audit (PCA) process is a structured examination, after Customs has released cargo of relevant commercial data, sales contracts, financial and non-financial records, physical stock and other assets of traders. The purpose is to measure and improve the traders' compliance. The WCO further states that PCA has proved to be an essential tool ensuring that Customs controls are effective in many aspects, including compliance with the WTO Customs Valuation Agreement. It plays a role in the implementation of an effective Customs risk management strategy. Through the application of a risk-based post-clearance approach, Customs Administrations are able to target their resources more effectively, create win-win partnerships with traders, who will be prompted to comply fully and voluntarily with the rules as this will facilitate clearance procedures, and hence trade.

PCA involves measures by which Customs Authorities satisfy themselves as to the accuracy and authenticity of declarations through systematic examination of client’s records and business systems. PCA is a Customs control measure used to promote trade facilitation that rely on risk management. An on-site visit gives Customs an opportunity to assist the client by educating or advising on procedures and regulatory requirements relating to Customs & Excise.

The legislative provision for Post Clearance Audit in Zimbabwe is contained in Customs & Excise Act [Chapter 23:02]. This legislation provides the obligations applicable to our clients in relation to Post Clearance Audits, and includes such requirements as the retention of clearance documentation for a period of 6 years, the need to produce such documentation on request by a ZIMRA officer, and the right of an officer to conduct the PCA. The legislation also provides the client with certain rights during the PCA which include the right to confidentiality, and the right to be informed of the results of the PCA.

The PCA process is designed to educate the client in areas where they may have some deficiencies and allows for the correction of systems, controls and processes within the clients work processes. It also provides the client with an opportunity to rectify any discrepancies noted during the clearance process some of which may not have any implications on the levels of duty paid on clearance. PCA also gives the client a platform to assess the capabilities of their clearing agents.

Civil Servant Rebates

SI 154 of 2001 (Customs & Excise General Regulations), section 144(U) & (V) as read with Statutory Instrument (SI) 124 of 2022, promulgated on July 2022 provide for a rebate of duty on motor vehicles imported or taken out of bond by Civil Servants and members of the Independent Service Commissions SI 124 of 2022 of 1 July 2022 replaces SI 52 of 2019 which came into effect from 01 January 2019.

The age restrictions of the eligible vehicle is ten years from date of manufacture; the respective customs tariff codes and other conditions of the rebate are as stipulated in S.I 124 of 2022.

Qualifying civil servants are required to submit the following documents to the nearest ZIMRA offices for processing of the rebate:

A duly signed application letter that has full description of the vehicle (year, make, and model of the vehicle, chassis number, engine number and colour) for one to be considered as a beneficiary.
A pro-forma invoice/commercial invoice/bill of lading/ certificate of conformity or any other document pertaining to the acquisition and transportation of the vehicle
A letter from the responsible Permanent Secretary of the applicant’s line ministry confirming employment.
Recommendation letter from the Public Service Commission/ Independent Commissions (Police Service Commission / Defence Forces Service Commission/ Prison Service Commission)
Treasury (Secretary for Ministry of Finance) concurrence letter.
A copy of the driver’s license for the public servant.
A copy of the Applicant’s national Identity Card
A letter of approval from CMED Private Limited for the loan, in the case of funding from CMED Transport Purchase Fund.
Current pay slip
Current proof of residence

Documents can be submitted to ZIMRA in person or via ZIMRA email at the ZIMRA office where the rebate will be granted. According to the ZIMRA client charter, we promise the following upon submission:

Acknowledgement of receipt of the submitted correspondence shall be done within 2 working days.
Response to the application for rebate of duty shall be done within 14 days.
All information will be handled in strict confidence and privacy shall be maintained.

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