Zvamaida Murwira-Senior Reporter
PRESIDENT Mnangagwa has gazetted an agreement between Zimbabwe and Switzerland for the avoidance of double taxation with respect to taxes on income and capital gains.
The agreement, which shall apply to persons who are residents of either country, also has measures to prevent tax evasion.
President Mnangagwa proclaimed this in terms of Section 91 of the Income Tax Act, which allows him to enter into an agreement with any country in respect of tax collection and that he is bound to give notification in a Government Gazette of such an agreement.
“Proclamation by His Excellency, the President of the Republic of Zimbabwe and Commander-in-Chief of the Defence Forces of Zimbabwe, Dr Mnangagwa. Whereas, it is provided for by section 91 of the Income Tax Act [Chapter 23:06], that the President may enter into agreements with the government of any other country or territory with a view to the prevention, mitigation or discontinuance of the levying, under the said Act and the laws of such other country or territory, of taxes in respect of the same income, or the rendering of reciprocal assistance in the administration of, and in the collection of, taxes under the said Act and taxes on the income levied under the laws of such other country or territory,” reads the notice.
“And whereas, it is provided by the said section that, as soon as may be after the conclusion of such agreement, the terms thereof shall be notified by the President by proclamation in the Gazette, and whereas, the said agreement was concluded with the Government of the Swiss Confederation on the 19th of March, 2025. Now therefore, under and by virtue of the powers vested in the President as afore said, I do hereby proclaim, declare and make known the agreement contained in the Schedule.”
The two countries signed a Double Taxation Agreement (DTA) on March 19, 2025, to prevent income and capital gains from being taxed twice in both countries, fostering legal certainty and encouraging bilateral economic ties.
The agreement is a step towards strengthening the economic and diplomatic relations between Switzerland and Zimbabwe by enhancing tax cooperation, aligning with Organisation for Economic Cooperation and Development (OECD) standards.
It now awaits parliamentary approval in both Zimbabwe and Switzerland to officially become effective.
Article 15 of the agreement seeks to ensure that one’s salary is taxed in the country where he or she is providing employment.
“Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State,” reads the notice.
The agreement also indicates that income from immovable property will be taxable in the state in which it is resident.
“Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State,” reads the agreement.
The agreement also provides that profits and dividends of an enterprise will be taxed in the state it is domiciled in unless the enterprise operates another entity in another country.
Other earnings that will not be subjected to double taxation include director fees, income from employment, capital gains, fees for technical services, royalties, pension and annuities, among others.
The agreement does not, however, affect fiscal privileges for diplomats or consular posts.
“Nothing in this Agreement shall affect the fiscal privileges of members of diplomatic missions or consular posts under the general rules of international law or under the provisions of special agreements,” reads the notice.
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