New tax law imposes hefty duties on luxury vehicles in Zimbabwe

ZimSphere

HARARE – In a statutory instrument gazetted on Thursday, Finance, Economic Development and Investment Promotion Minister Mthuli Ncube announced that the new surcharge increasing duty on luxury vehicles is now law and will start operating on 1 January, 2024. 

Image: GearJunkie

The new tax measures, contained in Statutory Instrument 293A of 2023 and published in terms of the Customs and Excise Act, provide that vehicles with a free-on-board value of between US$120 000 and US$300 000 will pay a surcharge of 30 percent, while those valued at US$300 001 to US$700 000 will be taxed at 40 percent. Vehicles exceeding US$700 000 will pay 50 percent of the value.

The free-on-board value is the upfront or landed cost of the imported car before transport, insurance, and inspection fees are factored in.

Commercial and industrial vehicles, as well as those imported by the government will be exempt from the new tax measures. 

This new tax law repeals Statutory Instrument 87 of the 2023, the latter which provided a flat surcharge of 30 percent on vehicles valued at USD$120,000 and above and did not state specific categories of the price ranges.

The new law is part of the government's proposed taxes outlined in the 2024 National Budget, as government aims to widen the tax base and raise enough revenue to alleviate the constrained national fiscus so as to fund various programs and initiatives. 

Parliament is still conducting debates on the proposed taxes in the national budget, given how the proposed tax measures have elicited different reactions from various stakeholders in the country. 

Speaking in a National Assembly debate on the national budget on Wednesday, Corban Madzivenyika, a Citizens Coalition for Change (CCC) Member of Parliament for Mbizo constituency, welcomed the new luxury car duty on high as a commendable tax measure, saying it readdressed tax inequalities. 

"Whenever one buys a high value vehicle, it is very clear that person is getting income. Normally by their nature, high value vehicles are luxurious. If we give a surcharge of 40% that is fine. We are now readdressing the inequalities in terms of taxes than to throw the burden always to the last man," he said. 

He added, "I would like to appreciate this very important revenue measure which has been created by the Hon. Minister [Mthuli Ncube]."