Pay as you earn (PAYE) is the tax paid by employees on remuneration for services rendered to an employer. An employee includes a working director for the purposes of charging PAYE.

Remuneration as defined in the income tax legislation includes benefits such as use of company motor vehicle, interest free loans, free housing and furniture as well as allowances granted to an employee, spouse, or child. Other benefits may include subsidized share purchases, company provided holiday facilities, free accommodation, subsidized travel and school fees.

Executive directors’ fees, bonus and remuneration including benefits are subject to PAYE calculated according to the prevailing legislated tax bands. Conversely, non executive director’s fees are subject to 20% withholding tax.

Employees who receive remuneration from more than one source or work for one employer for a period of less than a tax year must complete and submit income tax returns. The Zimbabwe Revenue Authority will then issue an assessment and refund any tax overpaid or request payment of the tax shortfall as the case may be.

Payments made to independent contractors who are not employees are not subject to PAYE. This is only possible if the contractors are independent of the employer and carrying on their trade or profession and must not be subject to the control of, or abide by the code of conduct of the organization that pays them. In the absence of the said characteristics among others, the Zimbabwe Revenue Authority may treat the contractors as employees and payments to them may be subjected to PAYE.