Introduction

PAYE (Pay-As-You-Earn) is a mandatory income tax deduction in Zimbabwe, applicable to salaries and wages. Both employers and employees must understand PAYE calculations to ensure compliance with ZIMRA regulations and avoid penalties.

This guide provides a step-by-step method for calculating PAYE using the latest tax bands, along with practical examples to help employees and employers accurately determine income tax obligations.

1. Understanding PAYE in Zimbabwe

PAYE is deducted directly from an employee’s salary by the employer and remitted to the Zimbabwe Revenue Authority (ZIMRA). Key points include:

  • It is based on taxable income, which is total income minus allowable deductions.
  • Employers are responsible for calculating and remitting PAYE each month.
  • PAYE rates are progressive, meaning higher income levels are taxed at higher rates.

PAYE ensures that employees meet their annual tax obligations gradually, reducing the risk of large lump-sum payments at the end of the year.

2. 2025 PAYE Tax Bands in Zimbabwe

The PAYE system in Zimbabwe uses progressive tax bands. For 2025, the tax bands are as follows:

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%

Note: Allowable deductions, such as pension contributions and approved expenses, are subtracted from gross salary before applying the tax bands.

3. Steps to Calculate PAYE

Step 1: Determine Gross Income

Start with the employee’s monthly gross salary, including all allowances, bonuses, and benefits that are taxable.

Step 2: Subtract Allowable Deductions

Deductions may include:

  • Contributions to pension funds
  • Contributions to approved medical aid schemes
  • Any other tax-deductible allowances

Step 3: Apply Tax Bands

Use the progressive tax bands to calculate PAYE:

  1. Income within the first band is taxed at 0%.
  2. Income in the second band is taxed at 20%, and so on.

Step 4: Calculate Total PAYE

Add up the taxes from each applicable band to get the total monthly PAYE deduction.

4. Example Calculation

Example: An employee earns ZWL 35,000 per month. Deductions of ZWL 2,000 for pension contributions are allowed.

  1. Taxable Income: 35,000 – 2,000 = ZWL 33,000
  2. Apply Tax Bands:
    • First 5,000: 0% → ZWL 0
    • Next 5,000 (5,001 – 10,000): 20% → ZWL 1,000
    • Next 20,000 (10,001 – 30,000): 25% → ZWL 5,000
    • Remaining 3,000 (30,001 – 33,000): 30% → ZWL 900

Total PAYE: 0 + 1,000 + 5,000 + 900 = ZWL 6,900

The employee’s net salary would be: 35,000 – 6,900 = ZWL 28,100

5. Tips for Employers

  • Use ZIMRA’s official PAYE tables to ensure accurate deductions.
  • Update payroll systems whenever tax bands or rates change.
  • Keep records of all deductions and remittances for compliance and audit purposes.
  • Provide employees with monthly PAYE statements showing gross salary, deductions, and net pay.

6. Tips for Employees

  • Verify your monthly PAYE deductions against your salary and allowances.
  • Ensure all eligible deductions (pension, medical aid) are correctly applied.
  • Keep copies of PAYE certificates for tax filing and verification purposes.
  • Understand your tax bracket to plan salary negotiations or additional income sources.

7. Common Mistakes to Avoid

  • Failing to apply deductions correctly before calculating PAYE
  • Using outdated tax bands or rates
  • Misclassifying allowances or benefits, resulting in over- or under-deduction
  • Late remittance by the employer, which can incur penalties

Conclusion

Calculating PAYE in Zimbabwe using the latest tax bands is straightforward if you follow the steps outlined: determine gross income, apply allowable deductions, calculate tax per band, and sum up total PAYE.

By understanding the PAYE system, both employers and employees can ensure compliance with ZIMRA, avoid penalties, and plan effectively for taxes. Proper PAYE calculation also promotes transparency and financial planning in the workplace.