Corporate - Deductions

Last reviewed - 28 February 2024

The Act makes provisions for specific deductions. Some of the deductions (e.g. the deduction of foreign exchange losses, development and exploration costs, hire purchase allowances, and manufacturing allowances) can be more complex.

Capital allowances

The cost (including finance charges) of machinery, implements, and other articles used by the taxpayer in the production of income is deductible in four equal annual allowances. No apportionment is required where the asset was held for less than 12 months.

Industrial buildings (including hotels) constructed and used by the taxpayer in the production of income qualify for an initial allowance of 25% of construction cost in the year they enter service. Thereafter, an annual allowance of 25% is deductible for each year following the year of construction. Additions to existing buildings (not alterations or repairs) qualify for the same deductions. It is important to note that the allowance is calculated on the cost of construction and not the cost of acquisition. In the latter case, the allowances are set at 5% of the cost.

A mining exploration expenditure incurred before commencement of production is deductible in full in the first year of production against income derived from the mine. Subsequent development expenditure is presently written off in the year expended.

Capital allowances may also be deducted with respect to leasehold improvements.

A recovery or recoupment of allowances previously claimed should be included in the gross income of a taxpayer in the event that the allowance is recovered or recouped by way of disposal. The recoupment is calculated on the capital allowances previously granted.


Goodwill is currently not deductible for tax purposes in Zimbabwe.

Start-up expenses

Start-up expenses may be deducted if incurred within 18 months of commencement of business and not considered to be capital in nature.

Interest expenses

Zimbabwe has thin capitalisation rules based on a 3:1 debt-to-equity ratio. A portion of the overall interest may be disallowed if this ratio is exceeded. In addition, any disallowed interest will be treated as a deemed dividend and subjected to a 15% WHT.

Bad debt

Bad debts written off may be claimed, but not a provision for bad debts.

Charitable contributions

Donations (with varying maximum limits) made to specified charities and educational bodies may be claimed.

Entertainment expenses

Entertainment expenses are not deductible for tax purposes.

Fines and penalties

Fines and penalties are not deductible for tax purposes.


Taxes are generally not allowed as a deduction against income unless they form a part of a cost of an allowable expense (e.g. VAT incurred on an expense line that may not be claimed as input tax).

Net operating losses

Assessed tax losses may be carried forward (but not backwards) for up to six years, provided the company continues to trade. This restriction does not apply to mining companies. Tax laws do not allow for losses to be transferred to other group companies, and anti-avoidance provisions may be triggered by transactions designed to transfer or exploit assessed losses.

Assessed losses are reduced in the event of a compromise agreement with creditors.

Payments to foreign affiliates

The law prohibits the deduction of amounts incurred in excess of specified limits in respect of management and general administration expenses, as well as interest. This applies to branches or subsidiaries of both local and foreign companies.

The limit on management and general administration expenses is based on such expenses exceeding 1% and 0.75%, respectively, for a company already in production and prior to production, of total tax-deductible expenses.