Introduction

As Zimbabwe modernizes its capital markets and regulatory environment, understanding Share Transfer Tax (STT) has become essential for investors, companies, and legal practitioners. Whether you’re involved in mergers and acquisitions, private equity deals, or simply transferring shares between individuals, it’s critical to grasp how this tax works and how to comply with it legally and efficiently.

This article explores the legal basis, calculation, exemptions, procedural requirements, and implications of Share Transfer Tax in Zimbabwe in 2025.

What is Share Transfer Tax?

Share Transfer Tax is a government levy imposed on the transfer of ownership of shares in a company. This tax arises when there is a change in beneficial ownership of shares, whether through sale, donation, inheritance, or restructuring.

In Zimbabwe, Share Transfer Tax is governed by various legislation, including:

  • The Finance Act
  • The Capital Gains Tax Act (for shares sold at a profit)
  • The Income Tax Act (where the shareholding is linked to ongoing business activity)

While Zimbabwe does not levy a specific named “Share Transfer Tax” as in some countries, capital gains tax (CGT) and stamp duty mechanisms functionally act as such during share transactions.

Key Regulatory Bodies

Two key authorities regulate and oversee share transfers and the taxes applicable in Zimbabwe:

  • Zimbabwe Revenue Authority (ZIMRA): Responsible for assessing and collecting CGT, Income Tax, and any applicable stamp duties on share transfers.
  • Zimbabwe Stock Exchange (ZSE) and Victoria Falls Stock Exchange (VFEX): Oversee compliance and transactional rules for publicly traded shares.

When is Tax Payable on Share Transfers?

Tax is typically payable in the following scenarios:

  1. Private sale of shares in a company
  2. Inheritance or donation of shares
  3. Mergers, acquisitions, or corporate restructures
  4. Disposal of shares listed on the ZSE or VFEX
  5. Transfer of shares between related parties

It is the responsibility of the transferor (seller) to pay the relevant taxes before or during the transfer process.

Tax Types Applicable to Share Transfers in Zimbabwe

1. Capital Gains Tax (CGT)

Capital Gains Tax is the primary levy applicable to the disposal of shares in Zimbabwe.

CGT Rates for Shares:

Transaction Type

CGT Rate

Listed Shares (ZSE/VFEX)

1% of transaction value (gross)

Unlisted Shares (private equity)

20% of net capital gain

Listed shares attract a lower flat rate on the transaction value, making them tax-efficient, whereas private share transfers are taxed on the actual gain realized.

Note: For shares acquired before February 2009, CGT is levied at 5% of the gross sale price.

2. Income Tax (Where Applicable)

If shares are sold as part of a business’s normal trading activity (such as a brokerage firm or a company flipping shares), the proceeds may be treated as business income and taxed under corporate income tax rates.

3. Stamp Duty

Stamp duty on share transfers is not currently enforced broadly in Zimbabwe for listed shares but may apply in private company transactions, especially where share certificates or agreements are notarized.

How to Calculate Tax on Share Transfers

For unlisted shares (e.g., private company shares), CGT is calculated as:

Capital Gain = Sale Price – (Purchase Price + Allowable Costs)

CGT Payable = 20% of Net Capital Gain

Example:

  • Sale price: USD 100,000
  • Purchase price: USD 60,000
  • Legal fees: USD 5,000

Capital Gain = 100,000 – (60,000 + 5,000) = 35,000 CGT = 20% of 35,000 = USD 7,000

For listed shares, CGT is simpler:

CGT = 1% of Total Sale Value

If you sell shares worth USD 200,000 on the ZSE: CGT = 1% × 200,000 = USD 2,000

Exemptions and Reliefs

Certain share transfers are exempt from tax under Zimbabwean tax law:

1. Intra-Group Transfers

Transfers between companies within the same corporate group may be exempt from CGT provided:

  • The companies are 100% owned by the same holding entity.
  • The transaction does not result in an actual change in beneficial ownership.

2. Donations and Inheritance

If shares are inherited through a deceased estate or donated for non-commercial reasons, the transfer may be CGT-exempt, especially if no cash changes hands.

3. Employee Share Ownership Schemes (ESOPs)

Shares issued to employees under approved ESOP schemes may be exempt from CGT or taxed at a reduced rate.

4. Reinvestment or Rollover Relief

Where proceeds from a share sale are immediately reinvested in qualifying Zimbabwean businesses, CGT may be deferred under investment promotion regulations.

Documentation Required

To legally transfer shares in Zimbabwe and ensure tax compliance, the following documents are typically required:

  • Share Sale Agreement
  • Share Certificates (original and updated)
  • ZIMRA Capital Gains Tax Form (CGT1)
  • Company resolutions (if applicable)
  • Tax clearance certificates
  • Proof of payment of CGT

Share Transfers and the Companies and Other Business Entities Act (COBE)

The COBE Act [Chapter 24:31] outlines procedures for registering share transfers in Zimbabwean companies. Key points include:

  • Share transfers must be recorded in the company’s share register.
  • Directors must approve the transfer through a formal resolution.
  • Transfers involving foreign shareholders must comply with Exchange Control Regulations and may require Reserve Bank of Zimbabwe (RBZ) approval.

For more on corporate registration processes, you can visit zimcompaniesregistry.co.zw.

Special Considerations for Foreign Investors

Foreign investors face additional requirements, such as:

  • Exchange Control Approval: Mandatory for non-residents acquiring or disposing of shares.
  • Tax Clearance: Must obtain clearance from ZIMRA before repatriating sale proceeds.
  • DTA (Double Taxation Agreements): Investors from countries with tax treaties (e.g., South Africa, China) may benefit from reduced CGT rates.

Failure to comply may result in withholding of proceeds or penalties.

Compliance and Penalties

Non-compliance with share transfer tax requirements can lead to:

  • Penalties up to 100% of the tax due
  • Interest charges on delayed payments
  • Blocked company registration or share registry updates
  • Legal sanctions for tax evasion or misrepresentation

Companies and individuals are advised to engage qualified tax professionals or legal advisors when undertaking share transfers.

Role of Transfer Secretaries

In Zimbabwe, transfer secretaries such as Corpserve Registrars and First Transfer Secretaries help facilitate legal and tax-compliant share transfers. Their responsibilities include:

  • Confirming identity and ownership
  • Preparing share transfer forms
  • Liaising with ZIMRA for tax clearance
  • Updating company share registers

Working with reputable transfer secretaries ensures smoother processing and fewer compliance issues.

Zimbabwe has introduced several digital and legislative improvements impacting share transfers in 2025:

  • Online CGT Submission: Taxpayers can now file and track CGT obligations through the ZIMRA e-services platform.
  • ZSE Direct and VFEX App Integration: Retail investors can buy/sell shares and automatically calculate taxes online.
  • Push for Transparency: Anti-money laundering (AML) rules now require stricter Know-Your-Client (KYC) checks in all share transfers.
  • Tax Incentives for Investors: VFEX-listed companies enjoy special CGT exemptions to promote foreign investment.

Frequently Asked Questions (FAQs)

1. Can shares be transferred without paying tax?

Only if the transaction qualifies under one of the legal exemptions. Otherwise, tax must be paid.

2. What happens if CGT is not paid on a private share transfer?

ZIMRA can invalidate the transfer, impose penalties, or initiate audits on both parties involved.

3. Are share gifts between family members taxable?

Yes, unless they meet donation or inheritance exemption criteria under the CGT Act.

4. How long does the CGT process take?

Typically, 5–10 working days, depending on document completeness and ZIMRA’s processing speed.

Conclusion

Understanding Share Transfer Tax in Zimbabwe is essential for smooth, compliant business transactions and personal investments. Whether you’re buying into a startup, divesting from a listed company, or handling estate planning, taxes on share transfers—particularly Capital Gains Tax—must be factored into your strategy.

With the right knowledge, professional guidance, and proper documentation, you can ensure tax efficiency and avoid compliance pitfalls. Stay informed and always consult with a certified tax advisor or legal consultant for complex transactions.