The Income Tax Act [Chapter 23:06] provides that any amount received by a taxpayer in respect of services rendered or to be rendered shall be included in a taxpayer’s gross income, provided that the source of income is Zimbabwe.

If a taxpayer is compensated for services rendered in terms of an employment relationship, then such compensation will be subject to the Pay As You Earn system or “PAYE”. This system obliges an employer to withhold tax on a monthly basis, on behalf of the Zimbabwe Revenue Authority (“ZIMRA”) before paying the employee’s net salary. Employee’s tax in Zimbabwe is levied on a sliding scale with higher rates of tax being levied on high income earners and lower rates of tax or no tax at all being levied on low income earners. As alluded above, employee’s tax is only payable upon the existence of an employment relationship and it follows, therefore, that the question of whether or not an employment relationship actually exists is of decisive importance.  

If a taxpayer renders services to a company as an independent contractor or consultant, then the resulting remuneration will not be subject to the PAYE system and tax will only become payable to ZIMRA at the end of the year of assessment (annually) instead of on a monthly basis. Independent contractors / consultants do not have to submit their earnings under the PAYE system. In distinguishing between an independent contractor or consultant and an employee, authorities generally look at the nature of the relationship between the parties, the manner in which services are rendered and the level of control exercised on the service provider.