The Pay As You Earn (PAYE) system is a method of paying Income Tax on remuneration. The employer is mandated to deduct tax from salary or pension earnings before paying out the net salary or pension.

This article is intended to provide you with a simple and logical introduction to some basic principles of Income Tax as it applies to employees.

The Income Tax Act [Chapter 23:06] specifies what elements of an employee’s remuneration or earnings are subject to tax and at what rate of tax. It also deals with what income is exempt from tax and what deductions are allowed from these earnings, prior to tax being calculated.

Assume then for a moment that everything you earn - be it in cash, benefits, or an item of value given instead of cash - is subject to some form of tax. However, the determination of the value and its associated tax liability in respect of any of these forms of payments will differ in some cases.

The official tax table operates on a progressive rate of taxation system, (i.e. the higher your earnings, the greater percentage tax you pay on each bracket of earnings). When your earnings reach a certain amount, the percentage stops increasing and a flat rate of tax becomes applicable for any earnings above this level - that is Marginal Tax Rate (MTR).

The Table below shows tax tables for period 1 January to 31 December 2024 for USD and 5 April to 31 December 2024 for ZiG.

The due date for the submission of PAYE returns and payment is the 10^th of the following month.

PAYE is calculated as follows:

1. Determine gross income for the day/week/month/year.
2. Deduct exempt income, for instance bonus: You get => Income
3. Deduct allowable deductions, e.g. pension: You get => Taxable Income.
4. Please refer to https://www.zimra.co.zw/domestic-taxes/tax-tablesfor tax tables. You get => Tax on Taxable Income.

NB for salaries with both ZiG and USD components use the USD tax tables and apportion the tax due accordingly.

5. Deduct tax credits e.g. elderly, blind or disabled persons (US$900.00 or ZiG equivalent per annum) and medical credit $1.00 of every $2.00 paid: You get => Tax after credits.
6. Calculate 3% Aids Levy and add to tax after credits: You get actual tax payable.