CAPITAL GAINS TAX

Modified on Thu, 13 Apr, 2023 at 9:40 AM

What is Capital Gains Tax?

Capital Gains Tax (CGT) is levied on the capital gain arising from the disposal of a specified asset in terms of section 6 of the Capital Gains Tax Act [Chapter 23:01].

What is a specified Asset?

According to section 2 of the Capital Gains Tax Act [Chapter 23:01], a specified asset means:

(a) immovable property

(Immovable property is commonly referred to as real estate – a residential house, a warehouse, a manufacturing unit or a factory. The plants or trees that are attached to the earth are referred to as immovable property. ); or

(b) any marketable security

(Marketable securities are unrestricted short-term financial instruments that are issued either for equity securities or for debt securities of a publicly listed company. The issuing company creates these instruments for the express purpose of raising funds to further finance business activities and expansion. Governments also issue debt securities of this type in the form of T-bills, used for funding of public projects and expenditures. ); or

(c) any right or title to property whether tangible or intangible that is registered or required to be registered in terms of the -

(the aggregate of legal rights enjoyed by a person under law towards the ownership and possession of a property. Generally, title is associated with real estate and signifies absolute ownership. )

(i) Mines and Minerals Act [Chapter 21:05]; or

(ii) Patents Act [Chapter 26:03]; or

(iii) Trade Marks Act [Chapter 26:04]; or

(iv) Industrial Designs Act [Chapter 26:02]; or

(v) Copyright and Neighbouring Rights [Chapter 26:05]; or

(vi) Brands Act [Chapter 19:05]; or

(vii) Geographical Indications Act [Chapter 26:06]; or

(viii) Integrated Circuit Layout-Designs Act [Chapter 26:07] Act (No. 18 of 2001).

Rates of Capital Gains Tax

The table below summarises the CGT rates as provided for in section 38 of the Finance Act (Chapter 23:04):

Specified Assets	Tax Rate in ZWL	Tax Rate in USD
Specified Assets acquired before 22nd February 2019 and sold from 22nd February 2019.	ZWL0.05 for each dollar of gross capital amount	USD0.05 for each dollar of gross capital amount
Specified Assets acquired from 22nd February 2019 and sold from that date and after.	ZWL0.20 for each dollar of the capital gain	USD0.20 for each dollar of the capital gain

Calculation of Capital Gains Tax

According to section 39 (10) of the Finance Act, the gain is accounted for in the currency realised from the sale and all sales are deemed to have been made in US$ unless the seller proves otherwise by documentary proof.
According to section 39A 9(a) of the Finance Act (Chapter 23:04), where the capital gain is received in Zimbabwe dollar the capital gains tax shall be payable in ZWL.In instances where the capital gain is received in whole or in part in foreign currency the tax due shall be determined proportionate to the capital gain and shall be paid in the respective currency of the gains.