Introduction

PAYE (Pay-As-You-Earn) is a critical component of Zimbabwe’s tax system, where employers deduct income tax directly from employees’ salaries and remit it to ZIMRA. While the process may seem straightforward, many employees and employers make mistakes that result in overpayment, underpayment, or penalties.

This guide highlights three common mistakes people make when calculating PAYE in Zimbabwe and provides practical advice to avoid them.

1. Failing to Deduct Allowable Tax Deductions

One of the most frequent errors is not accounting for allowable deductions before calculating taxable income.

Key Points:

  • Deductions such as pension contributions, approved medical aid, and other statutory allowances reduce taxable income.
  • Ignoring these deductions leads to overstated taxable income, which increases the PAYE owed unnecessarily.
  • Employers must ensure payroll systems correctly apply deductions each month.

Tip: Keep accurate records of all deductible contributions and confirm they are properly reflected in payroll calculations.

2. Using Outdated PAYE Tax Bands or Rates

Tax rates and bands in Zimbabwe are updated periodically. Using outdated information is a common cause of errors.

Key Points:

  • PAYE in 2025 uses the following tax bands:

Taxable Monthly Income (ZWL)

Tax Rate (%)

0 – 5,000

0%

5,001 – 10,000

20%

10,001 – 30,000

25%

30,001 – 50,000

30%

Above 50,000

35%

  • Using old rates can result in incorrect deductions, leading to compliance issues with ZIMRA.

Tip: Always verify the current tax bands on official ZIMRA publications or consult your payroll provider.

3. Misclassifying Allowances and Benefits

Many employees receive allowances, bonuses, or benefits-in-kind, but not all are taxable. Misclassifying these can create mistakes in PAYE calculation.

Key Points:

  • Some allowances, such as housing or travel allowances, may be partially or fully taxable.
  • Non-taxable benefits should not be included in the taxable income for PAYE purposes.
  • Misclassification can lead to overpayment of tax or penalties if ZIMRA discovers underpayment.

Tip: Employers should maintain a clear policy on allowances and consult ZIMRA guidelines to correctly classify taxable and non-taxable benefits.

Additional Tips for Accurate PAYE Calculation

  • Use payroll software or spreadsheets that are updated with the latest tax bands.
  • Provide employees with monthly PAYE statements to ensure transparency.
  • Regularly review payroll records to identify and correct errors early.
  • Consult a tax professional if the payroll includes complex allowances, bonuses, or multiple income sources.

Conclusion

Accurate PAYE calculation in Zimbabwe requires attention to detail and adherence to current tax regulations. The three most common mistakes—failing to deduct allowable contributions, using outdated tax bands, and misclassifying allowances—can easily be avoided with careful record-keeping and regular updates to payroll processes.

By ensuring correct PAYE deductions, both employers and employees can maintain compliance with ZIMRA, avoid penalties, and manage personal and business finances effectively.