Deduction Zimbabwe Revenue Authority

2/29/24, 9:56 PM Zimbabwe Revenue Authority
Prohibited Deductions –Section 16 of the Income Tax Chapter 23:06

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Expenses or losses incurred in the production of income or for the purposes of

trade shall be allowed as deductions against income if they are not of a capital
nature nor prohibited according to Section 16 of the Income Tax Chapter 23:06.
SECTION EXPLANATION
The cost incurred by any taxpayer in personal maintenance, his

Sect 16 (1) (a)
family or establishment.
Sect 16 (1) (b) Domestic or private expenses of the taxpayer, including expenses
incurred in travelling between his home and the place at which
he carries on a trade and, in the case of a taxpayer who carries
https://www.zimra.co.zw/news/2190:prohibited-deductions-section-16-of-the-income-tax-chapter-23-06 2/6
on two or more trades which are distinct in nature, between the

places at which such trades are carried on.
Any loss or expense which is recoverable under any insurance

Sect 16 (1) (c)
contract or indemnity.
Tax upon the income of the taxpayer or interest payable there-

on, whether charged in terms of this Act or any law of any
country whatsoever. The tax categories that a registered operator
may be liable to remit include but are not limited to:
1. Income Tax
2. Pay As You Earn
3. Value Added Tax
Sect 16 (1) (d) 4. Capital Gains Tax
5. Carbon Tax
6. Presumptive tax.
7. Non-resident shareholders’ tax.
8. Resident shareholders’ tax.
9. Non-residents’ tax on fees.
10. Non-residents’ tax on remittances.
11. Non-residents’ tax on royalties.
Any amount of Intermediated Money Transfer Tax charged in

Sect 16 (d) (1)
terms of section 22G of the Income Tax Act.
Interest which might have been earned on any capital employed

Sect 16 (1) (h)
in trade.
The rent of, or cost of repairs to, or expenses incurred on, any
premises not occupied for trade, or of any dwelling or domestic
Sect 16 (1) (i)
premises except in respect of such part as may be occupied for
the purposes of trade.
Sect 16 (1) (j) The cost of securing sole selling rights.
Passenger Motor Vehicle leasing cost excess: Amounts, in excess

of $100,000 paid for leasing a “passenger motor vehicle” (as
Sect 16 (1) (k) defined in the Fourth Schedule of the Income Tax Act (Chapter
23:06)) where the lease was entered into on or after 1st January
1999.
Sect 16 (1) (l) The cost of any shares awarded by the company to an employee
or director. This prohibition would counter any claim for a
deduction by a company in respect of either an issue of its own

share or, an award of shares in another company (for related
companies).
Expenditure incurred on entertainment, whether directly or by

the provision of an allowance to any employee, including a
Sect 16 (1) director. “Entertainment” is defined as including “hospitality” in
(m) any form” A deduction is therefore clearly precluded in respect
of the cost of, for example, a lunch for business associates,
despite the host’s purpose being the furtherance of trade
relationships
Expenditure incurred in the production of any income arising

Sect 16 1(n) from stocks or shares of any company. Dividends from foreign
companies, which are liable to income tax in the hands of a
taxpayer ordinarily resident in Zimbabwe, are taxable (at a flat
rate; without any deduction for related expenditure.)
Sect 16 1 (o) Expenditure incurred in the production of interest on any loan or

deposit with local financial institution
The prohibited deduction applies to the general administration

Section 16 (1) r and management fees paid by a subsidiary or holding company
or a local branch (where the parent is a foreign company
engaging in local mining operations).
Any interest expenditure incurred on foreign loans in excess of

the interest that would have been payable had the exchange rate
used to purchase the foreign currency needed to service the
Section 16(s)
interest on the loan been the same exchange rate as that
interest
ordinarily offered to other clients of the financial institution
providing or mediating the loan on the date of the transaction in
question.”
My Taxes, My Duties: Building my Zimbabwe!!
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.
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2/29/24, 9:56 PM Zimbabwe Revenue Authority

Prohibited Deductions –Section 16 of the Income Tax Chapter 23:06

Expenses or losses incurred in the production of income or for the purposes of

The cost incurred by any taxpayer in personal maintenance, his

on two or more trades which are distinct in nature, between the

Any loss or expense which is recoverable under any insurance

Tax upon the income of the taxpayer or interest payable there-

Any amount of Intermediated Money Transfer Tax charged in

Interest which might have been earned on any capital employed

Sect 16 (1) (j) The cost of securing sole selling rights.

Passenger Motor Vehicle leasing cost excess: Amounts, in excess

deduction by a company in respect of either an issue of its own

Expenditure incurred on entertainment, whether directly or by

Expenditure incurred in the production of any income arising

Sect 16 1 (o) Expenditure incurred in the production of interest on any loan or

The prohibited deduction applies to the general administration

Any interest expenditure incurred on foreign loans in excess of

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