COVID allowance converted to pensionable salary

Harare (New Ziana) – The US$300 COVID and cushioning allowance civil servants are paid will become part of pensionable salary across the board beginning next January next year, a cabinet minister said on Thursday.

This was part of a raft of tax and other incentives Finance, Economic Development and Investment Promotion Minister, Prof Mthuli Ncube unveiled for workers and industry in his Zw$60 trillion 2024 national budget.

Gradually increasing from US$75 to the current US$300, the allowance has played a significant role in helping civil servants ride the storm of economic hardships caused by, among other factors, exchange rate volatility and hyper-inflation in the past three years.

Prof Ncube also came up with other tax relief measures for workers, farmers, business and the tourism sector to tamper down workers’ and industrial anxieties and stimulate economic growth.

He moved the tax-free threshold to $750 000 per month or $9 million per annum, and adjusted the tax band to end at $270 million per year, above which tax will be levied at the rate of 40 percent from effect from January 2024.

Also reviewed is the tax-free bonus threshold from $500 000 to $7.5 million, taking immediate effect.

“Mr Speaker Sir, in order to support smallholder and subsistent farmers in the delivery of grain to the Grain Marketing Board and other commercial buyers, I propose to review the tax-exempt threshold on withholding tax on agricultural commodities that include soya beans, sunflower, groundnuts and cotton seed from US$1 000 per annum to US$5 000 or local currency equivalent,” said Prof Ncube.

“In order to allow the tourism sector to fully recuperate, I propose to renew the suspension of duty on new motor vehicles imported by safari and tour operators for a further two years, beginning 1 January 2024.”

Prof Ncube said in order to restore the supply chain from the manufacturer, wholesaler to retailer, only licensed and Tax 33 compliant operators will be allowed to procure goods from manufacturers and wholesalers, while traders registered for VAT (Value Added Tax) purposes and in possession of valid tax clearance certificates will be eligible to procure goods from manufacturers.

“I, further, propose to review downwards, the VAT registration threshold to US$25 000, or local currency equivalent, with effect from 1 January 2024. Enterprises that meet the above threshold should, thus, register and account for VAT, failure of which applicable penalties will be invoked,” he said.

New Ziana