Worldwide transfer pricing reference guide 2014

Zimbabwe
Taxing authority and tax law
Taxing authority: The Zimbabwe Revenue Authority (ZIMRA).
The relevant statutes are:
• Income Tax Act [Chapter 23:06]
• Value Added Tax Act [Chapter 23:12]
• Capital Gains Tax Act [Chapter 23:01]
• Customs and Excise Act [Chapter 23:02]
Relevant regulations and rulings
Though Zimbabwe currently has no specific transfer pricing provisions in the Tax Acts, anti-avoidance provisions suffice to ensure tax
compliance. The following are the provisions:
• Special provisions relating to persons carrying on business which extends beyond Zimbabwe (Section 19 of the Income Tax Act [Chapter
23:06])
• Where the trade of any person extends to any country other than Zimbabwe and the Commissioner is satisfied that it is impossible or
impracticable to ascertain the taxable income derived by such person from sources in Zimbabwe in the manner otherwise provided
in this Act, such person shall submit proposals for the determination of his taxable income in some alternative manner to the
Commissioner
• The Commissioner can accept such proposal and the taxable income determined for any year of assessment shall be deemed to be the
taxable income of the respective person for that year
• In case no such proposals have been submitted, or if the Commissioner is not satisfied with the proposals submitted, the Commissioner
may determine the taxable income in a manner that appears to him as the most appropriate, taking into account the circumstances
of the case
• Special provisions relating to determination of taxable income of persons buying and selling any property at a price in excess of or less
than the fair market price and of non-resident persons exporting products of Zimbabwe without prior sale (Section 23 of the Income Tax
Act [Chapter 23:06])
• The Commissioner may determine the fair market price of either movable or immovable in respect of persons carrying on trade in
Zimbabwe where:
• Property is purchased at a price in excess of the fair market price or
• Property is sold at less than the fair market price
• Special provisions relating to determination of taxable income in accordance with double taxation agreements (Section 24 of the Income
Tax Act [Chapter 23:06])
• If cross border sales and any other transaction involving a foreign element of management, control and capital entered into and
the conditions between the connected parties differ from those which would arise between parties dealing at arm’s length, then the
Commissioner is empowered to determine on an arm’s length the basis of the taxable income on any party carrying on business in
Zimbabwe
• Tax avoidance generally (Section 98 of the Income Tax Act [Chapter 23:06])
• The Commissioner shall determine the liability for any tax and the amount thereof as if the transaction, operation or scheme had not
been entered into or carried out, or in such manner as in the circumstances of the case he considers appropriate for the prevention
or diminution of such avoidance, postponement or reduction where having regard to the circumstances under which the transaction,
operation or scheme was entered into or carried out, the Commissioner is of the opinion that:
• It was entered into or carried out in a way which would not normally be employed or
• That it has created rights and obligations which would not normally be created between persons dealing at arm’s length
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