• ZIMRA introduces a 15% presumptive tax on commercial rental income from January 2026, applied to gross rents with no deductions allowed
• Enforcement relies on tenants and agents as statutory agents, requiring them to withhold and remit tax on behalf of landlords
• The tax may raise collections in the short term but risks higher rents, reduced property investment, and compliance challenges for landlords

Harare -The Zimbabwe Revenue Authority (ZIMRA) has introduced a 15% presumptive tax on rental income, effective 1 January 2026, under which landlords leasing premises to tenants carrying on trade, business or occupation will be taxed on gross rental receipts, with no deductions, allowances or credits permitted.

The measure, enacted under the Finance Act, 2025, marks a decisive shift away from net-income assessment toward gross-based taxation in Zimbabwe’s commercial property market.

The tax applies to registrable proprietors, defined as property owners, lessors or sub-lessors who earn rental income from business premises. While liability rests with the landlord, enforcement is driven largely through withholding mechanisms that place compliance responsibility on tenants and intermediaries rather than property owners themselves.

‘’A tenant liable for presumptive tax is a tenant who pay rent to the ‘’registrable proprietor’’ in order to conduct business , trade or an occupation on such land or premises,’’ reads the circular.

Under the presumptive framework, rental income earned from business premises is subject to a flat 15% tax treated as final. Expenses such as maintenance, insurance, borrowing costs, management fees and municipal rates are irrelevant for tax purposes.

This represents a clear policy choice by ZIMRA to prioritise administrative simplicity and certainty of collection over accuracy in measuring economic income.

The tax applies only where tenants are engaged in trade, business or occupation. Rental income from premises used solely for residential purposes is excluded, even where a property has mixed use.

In practice, however, the boundary between business and residential use is often blurred, particularly in informal or mixed-use urban properties, raising the likelihood of classification disputes.

The most consequential design feature of the tax is its enforcement model. Where a tenant is liable for presumptive tax, the tenant is required to withhold 15% of the rent and remit it directly to ZIMRA on behalf of the landlord.

Estate agents, trustees and property administrators are required to ensure the tax has been paid before disbursing rental income and may themselves be treated as statutory agents.

ZIMRA has further empowered itself to appoint tenants as statutory agents where landlords or agents fail to comply, requiring tenants to pay tax directly and, in limited cases, protecting them from eviction or rental escalation for up to three months. The message is unambiguous: ZIMRA is embedding tax enforcement into the rental payment chain rather than relying on landlord self-assessment.

On a revenue perspective, the tax is likely to be effective in the short term. Gross-based taxation and third-party withholding sharply reduce opportunities for under-declaration. From an economic perspective, however, the design introduces distortions.

The tax ignores cost structures,  therefore it disproportionately affects landlords with high expenses or debt-financed properties.

Two landlords earning identical gross rent will pay the same tax even if one carries significant financing or maintenance costs and the other does not. The likely response is cost pass-through to tenants, especially in commercial areas where demand is relatively inelastic, or reduced reinvestment in property maintenance and upgrades.

Smaller landlords and agents also face elevated compliance risk. Monthly filing deadlines, tight payment windows and a 100% penalty on unpaid tax significantly raise the cost of error, not just evasion.

Zimbabwe’s approach is consistent with a regional move toward simplified rental taxation, but its design places it at the more aggressive end of the spectrum.

In Kenya, residential rental income is taxed at 7.5% of gross rent, reduced from 10% in 2023. The tax applies only to resident landlords earning between defined thresholds, and landlords may opt out and be taxed under the normal net-income regime. This preserves neutrality for larger or leveraged landlords.

Uganda applies a dual system. Individual landlords pay 12% on gross rental income above a tax-free threshold of UGX 2.82 million, with no deductions. Companies, however, are taxed at 30% on net income, with deductible expenses capped at 50% of gross rent. The system explicitly differentiates between small landlords and formal property businesses.

In Tanzania, rental income paid to resident landlords is subject to 10% withholding tax. For individuals, this is typically a final tax. For companies, the withholding tax is creditable against corporate income tax, preserving net-based taxation and full expense deductibility.

South Africa takes a different approach altogether. There is no presumptive rental tax. Rental income is taxed on a net basis at marginal rates, supported by strong third-party reporting, banking transparency and audit capacity rather than simplified tax design.

Compared with these systems, Zimbabwe’s framework stands out for three reasons, the absence of turnover thresholds, the lack of an opt-out into net-based taxation, and the application of presumptive taxation to commercial rather than residential rentals.

Over time, pressure may build for thresholds, sector-specific relief or elective treatment, particularly if evidence emerges of rising commercial rents, increased vacancies or reduced property investment.

In the near term, the presumptive rental income tax is likely to raise collections and improve visibility over commercial rental activity.

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