DISTRIBUTED BY VERITAS E-mail: veritas@mango.zw VERITAS MAKES EVERY EFFORT TO ENSURE THE PROVISION OF RELIABLE INFORMATION, BUT CANNOT TAKE LEGAL RESPONSIBILITY FOR INFORMATION SUPPLIED H.B. 6, 2012 Gazetted: Friday 23rd November 2012. FINANCE (NO. 2) BILL, 2012 MEMORANDUM This Bill will amend the Finance Act [Chapter 23:04], the Income Tax Act [Chapter 23:06], the Value Added Tax Act [[Chapter 23:12], the Customs and Excise Act [[Chapter 23:02], the Air Zimbabwe Corporation (Repeal) Act (No. 4 of 1008) and the Finance Act, 2012 (No. 4 of 2012). In more detail, the individual clauses of the Bill provide as follows: Clause 1 This clause sets out the Bill’s short title. Clause 2 This clause will provide for the reduction in rate of residents tax on interest from 15% to 5% in cases where the interest from which the tax is withheld is earned on fixed-term deposits having a tenure of at least 90 days. Clause 3 and Clause 5(b) Section 8(1) of the Income Tax Act defines the term “gross income” for the purposes of the Act. Gross income derivable from employment remuneration includes the value of certain benefits (commonly known as “fringe benefits”) afforded to employees, such as the value of motor vehicles, loans and accommodation at the employer’s expense. In order to encourage the retention of staff at primary and secondary schools, it is proposed to exclude from the gross income of teaching and non-teaching employees of those schools one half of any “school benefit” they receive from their employers, that is to say, one-half of the waiver of the whole or any portion of the amount of tuition fees, levies and boarding fees that would otherwise be payable by the employees concerned for any of their children or near relatives who are students at any school in which the employees are employed. Clause 4 In the interests of th reciprocal enforcement of tax assessments and the collection of outstanding taxes as between Zimbabwe and other countries with which the Government of Zimbabwe has concluded double taxation agreements, this clause is inserted to facilitate cooperation in the collection of taxes due to a foreign country by persons resident in Zimbabwe, and vice versa. Clause 5(a) The Third Schedule to the Income Tax Act lists amounts that are exempt from income tax. Paragraph 4(o) of the Schedule exempts bonuses and performance-related awards paid to employees, up to a maximum amount of US$700. Paragraph (a) of this clause will increase that amount to US $1 000.