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Mthuli Ncube reduces VAT and corporate tax

by Staff reporter
14 Nov 2019 at 21:36hrs | Views
Finance and Economic Development Minister Mthuli Ncube marginally cut corporate tax (24% from 25%), VAT (14.5% from 15%) and increased the tax free threshold to $2 000 from $700 with effect from January 1, 2020 while  he introduced a tax credit of ZWL500 per month per employee for corporates that employ an additional employee in a year of assessment. The credit will, however, be limited to a maximum of ZWL60 000 per year of assessment.

Minister Ncube unveiled a $63.6 billion expenditure budget but with revenue of$ 58.6 billion, a deficit of around 1.5% of GDP is expected.  In US dollars, the expenditure  is at US$3.99 billion using today's interbank rate of 15.9344.

Presenting the 2020 National Budget under the theme Gearing towards productivity, growth and job creativity, Ncube said the  main fiscal policy objective in 2020 is, directed at managing expenditure within the allocated supported by non-inflationary financing and complemented by a tight monetary policy framework.

Ncube highlighted the successes achieved in his first budget, which included dealing with the twin deficit. "Implementation of fiscal consolidation reforms saw consistent monthly budget surpluses reaching ZWL$1.4 billion between January and August 2019. On the current account, we managed to deliver a positive balance of US$116.4 million during the first half of the year, which all pointed to positive signs for restoring the much needed macro-fiscal stability and elimination of the twin deficits."

Tax Relief Measures

·Youth Employment Tax Credit to be claimed after the additional employee has served a period of 12 consecutive months.
Tax free threshold moved to $2 000 from $700  and adjust the tax bands to begin at ZWL2 001 and end at ZWL50 000, above which the highest marginal tax rate of 40%, in line with economic developments, with effect from 1 January 2020.

·Bonus Tax-Free Threshold at ZWL5 000 from ZWL1 000  with effect from 1 November 2019.

·The non-taxable portion of the retrenchment package to $50 000 or one-third of the package, to maximum of $80 000 from $10 000

.Intermediated Money Transfer Tax (IMTT) tax free threshold reviewed to ZWL$100 from ZWL$20 and the maximum tax payable per transaction by corporates from the current ZWL$15 000 to ZWL$25 000 for transactions with values exceeding ZWL$1 250 000.

·Social transfers by Development Partners accredited in terms of the Privileges and Immunities Act [Cap 3:03] exempt from IMTT.

·Corporate Income Tax revised to 24% from 25%.

·Value Added Tax Rate reduced to 14,5% from 15% in order to stimulate aggregate demand.

·Excise Duty on Fuel to ring-fence 5% of excise duty revenue collected on fuel towards the construction and rehabilitation of Beitbridge-Harare-Chirundu highway, with effective from 1 January 2020.

Source - finx