Public Notice No. 51/2023, issued on 10 August 2023 by the Zimbabwe Revenue Authority (ZIMRA) significantly changed the local currency employment tax bands and tax rates with effect from 01 August 2023, in a bid to provide relief to taxpayers.
Importantly, where clients pay employees in US$’s, these bands and tax rates remain unchanged.
The new tax tables are enumerated below:
Persistently high inflation, elevated interest rates, and a depreciating and volatile Zimbabwe dollar have combined to fuel a cost of living crisis for households which has seen employees (being paid in local currency) disposable income being severely reduced.
The high inflation rate in Zimbabwe is clearly demonstrated by the graph below:
The new blended inflation calculations use 77% US$ and 33% RTGS inflation to calculate the blend.
Given the high inflation rate, employees have been receiving significant salary increases and/or hardship allowances to keep up with the ever-increasing cost of living, only for employees to pay higher taxes because the salary increases push them to a higher tax bracket.
The Permanent Secretary for Finance and Economic Development stated, ”Due to recent macroeconomic changes that necessitated salary reviews, a significant number of employees are caught up in bracket creep, consequently, some salaries and wages are subject to higher rates of tax. In order to provide relief to taxpayers…Treasury has approved a review of the local currency tax tables with effect from 1 August 2023.”
The increase in the tax brackets will provide welcome relief to local currency-paid employees, who have seen their purchasing power continually (and dramatically) decrease over the last three years.
Employers (HR and Payroll) can expect a flood of questions from employees when the August payslips are published.
In addition, we have significant experience integrating the payroll platform with SuccessFactors, Workday, and other related systems.
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