Pay As You Earn (PAYE) USD tax rates and tables 2021

It’s 2021 and dollarisation 2.0 is in full swing so if you are earning or paying employees in foreign currency (USD) here are the PAYE or Pay as you Earn tax rates according to ZIMRA.

PAYE (Pay As You Earn) is a way of paying income tax on salaries. The employer is charged with deducting tax from an employees earnings before paying out net salary or pension.

ZIMRA’s statement on PAYE for USD earners is as follows:

ZIMRA advises its valued clients that Section 4A of the Finance Act (Chapter 23:04) states that a person whose taxable income from employment is earned in whole or in part in a foreign currency shall pay tax in the same or another specified foreign currency on so much of that income as is earned, received or accrued in that currency. In line with these provisions, clients are hereby reminded that where remuneration is paid in foreign currency, the PAYE arising from this income should be in foreign currency.
What is Remuneration
Remuneration means any amount of income which is paid or payable to any person by way of any salary, leave pay, allowance, wage, overtime pay, bonus, gratuity, commission, fee, emolument, pension, superannuation allowance, retiring allowance, stipend or commutation of a pension or an annuity, whether in cash or otherwise and whether or not in respect of services rendered. Advantages and benefits granted to an employee, spouse or child form part of remuneration. The following are the advantages and benefits that form part of remuneration:
-board or occupation of quarters or residence,
-use of company furniture or motor vehicle,
-use of or enjoyment of any other property, loans, school fees benefit, any allowance
-and passage benefit.
2021 Forex and Local Currency Tax Tables HighlightsFor the year 2021, there are separate PAYE Tax Tables for Foreign Currency (USD) and Local Currency (ZWL$). The currency of remuneration determines the Tax Table to be used by the taxpayer. Highlighted below are quick insights of the USD and ZWL$ tax tables:
-Foreign Currency (USD) Tax Tables for 2021 remained the same as year 2020
-Tax Free Threshold remains at USD840 per annum or USD70 per month-Exempt Bonus USD320 per annum
-Zimbabwean Dollar (ZWL$) Tax Tables for 2021 have been amended
-Tax Free Threshold is now ZWL$ 120,000.0 per annum or ZWL$ 10,000 per month
-Exempt Bonus is now ZWL$25,000 per annum
Calculation of PAYE
-Determine the gross income by adding up basic salary and allowances (remuneration)
-Deduct exempt income and allowable deductions (exempt income includes bonus whilst allowable deductions include contributions to a pension fund).
– Determine taxable income and rate of tax applicable as per PAYE tables on the following link below:
https://www.zimra.co.zw/domestic-taxes/tax-tables

DAILY TABLE Example
				Rates
from	–	to	2.30	multiply by	0%	Deduct	–
from	2.31	to	9.86	multiply by	20%	Deduct	0.46
from	9.87	to	32.88	multiply by	25%	Deduct	0.95
from	32.89	to	65.75	multiply by	30%	Deduct	2.60
from	65.76	to	98.63	multiply by	35%	Deduct	5.88
from	98.64 and	above		multiply by	40%	Deduct	10.82

If an employee earns $8 per day The tax will be calculated thus: $8.00 x 20% -$0.46 = US$1.14

WEEKLY TABLE Example
				Rates
from	–	to	16.15	multiply by	0%	Deduct	–
from	16.16	to	69.23	multiply by	20%	Deduct	3.23
from	69.24	to	230.77	multiply by	25%	Deduct	6.69
from	230.78	to	461.54	multiply by	30%	Deduct	18.23
from	461.55	to	692.31	multiply by	35%	Deduct	41.31
from	692.32 and	above		multiply by	40%	Deduct	75.92

If an employee earns $60 per week The tax will be calculated thus: $60 x 20% -$3.23 = US$8.77

FORTNIGHTLY TABLE Example
				Rates
from	–	to	32.31	multiply by	0%	Deduct	–
from	32.32	to	138.46	multiply by	20%	Deduct	6.46
from	138.47	to	461.54	multiply by	25%	Deduct	13.38
from	461.55	to	923.08	multiply by	30%	Deduct	36.46
from	923.09	to	1,384.62	multiply by	35%	Deduct	82.62

If an employee earns $400 per fortnight The tax will be calculated thus: $400 x 25%-$13.38 = US$86.62

MONTHLY TABLE Example
				Rates
from	–	to	70.00	multiply by	0%		–
from	70.01	to	300.00	multiply by	20%	Deduct	14.00
from	300.01	to	1,000.00	multiply by	25%	Deduct	29.00
from	1,000.01	to	2,000.00	multiply by	30%	Deduct	79.00
from	2,000.01	to	3,000.00	multiply by	35%	Deduct	179.00
from	3,000.01 and	above		multiply by	40%	Deduct	329.00

If an employee earns $1 500 per month The tax will be calculated thus: $1 500 x 30% – $79.00 = US$371.00

ANNUAL TABLE Example
				Rates
from	0	to	840.00	multiply by	0%	Deduct	–
from	841	to	3,600.00	multiply by	20%	Deduct	168.00
from	3,601	to	12,000.00	multiply by	25%	Deduct	348.00
from	12,001	to	24,000.00	multiply by	30%	Deduct	948.00
from	24,001	to	36,000.00	multiply by	35%	Deduct	2,148.00
from	36,001 and	above		multiply by	40%	Deduct	3,948.00

If an employee earns $40 000 per year The tax will be calculated thus: $40 000 x 40%-$3,948.00 = US$12,052.00

For ZWL$ Tables click the link here

Calculate PAYE.
-Add AIDS Levy at 3% to come up with the tax due
Calculation of PAYE where one earns in USD and ZWL
Convert remuneration earned in RTGS Dollars to foreign currency at the prevailing Interbank rate;
-Add the remuneration determined above, to the remuneration earned in foreign currency to get total remuneration.
-Deduct allowable deductions to obtain the taxable amount. Deductions earned in RTGS$ should also be converted to foreign currency.
-Calculate PAYE in foreign currency using the foreign currency tax tables.
-Subtract the credits to determine the PAYE payable. Any credits earned in RTGS$ should be converted to foreign currency using the prevailing interbank rate as at date of running the payroll.
-Compute tax payable in foreign currency and in RTGS proportionately.Clients are kindly advised to take note of the following issues:
-Taxpayers can take advantage of the voluntary disclosure facility and make a full declaration of taxes previously omitted in tax returns and any business malpractices previously employed.
-All PAYE returns (P2 forms) should be completed in full and submitted through the ZIMRA e-services platform (http://efiling.zimra.co.zw)
-All payments should be done on time through banks. Refer to the following link on ZIMRA website for ZIMRA Bank Accounts details: https://www.zimra.co.zw/profile/2037-zimra-bank-accounts

1 Comment

King Todza

May 25, 2021, 5:55 PM

Zimra are not sincere when it comes to reviewing tax thresholds. When the budget was announced, the PAYE tax-free threshold in USD should have been ZWL10,000/82 (interbank rate) = USD122 but they chose a lower figure of US$70 so that they get more PAYE in USD terms. They did not review other thresholds such as VAT registration requirements in line with the exchange rates.

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