Simbarashe Hamudi
THE Capital Gains Tax Act introduced a special capital gains tax targeting the transfer of shares or interests in land-holding entities. The amendment, which takes effect from the year of assessment beginning January 1, 2026, inserts a new section 30C into the Act and significantly expands the tax net to capture indirect transfers of immovable property in Zimbabwe.
The new provision establishes a 20 percent special capital gains tax on transactions involving the transfer of shares or interests in entities that hold land or immovable property in Zimbabwe. The measure is widely viewed as a move to close legal loopholes that previously allowed property-rich entities to change hands without triggering direct capital gains tax on the underlying land.
Under section 30C, a “landholding entity” is broadly defined. It includes any company or business entity that, at the date of a taxable transfer, holds title to land or immovable property in Zimbabwe. The definition extends to foreign-incorporated or domiciled companies, locally incorporated subsidiaries of foreign holding companies, trusts, syndicates, joint ventures, and any other entity capable of holding title to land under the law of its domicile. The provision also covers nominees acting on behalf of beneficial owners.
By casting such a wide net, the amendment ensures that both domestic and offshore structures cannot escape taxation where Zimbabwean land is involved. Transactions concluded within or outside Zimbabwe fall within the scope of the law, provided they involve shares or interests in a qualifying landholding entity on or after January 1, 2026.
The amendment introduces detailed definitions of “beneficial owner” and “controller,” reflecting a clear intention to look beyond formal ownership structures. A beneficial owner includes any individual or entity that enjoys the benefits of ownership, even if the title is held in another name, such as a nominee. It also includes persons who, through ownership of shares, stakes, or assets, can exert a significant or preponderant voice in the affairs of the entity.
Similarly, a “controller” is defined as a person who, though not necessarily the beneficial owner, exercises decisive influence over the entity’s affairs, regardless of formal governance arrangements. The law provides that a person exerts a significant or preponderant voice if that person’s decisions are binding on the entity, if they can veto or overrule decisions of the governing body, or if they directly or indirectly control 25 percent or more of the voting rights. Notably, the definition of “person” includes a State or any arm or agency of a State.
The term “share or interest” is also expansively defined to include any share, stake, right, or interest in a landholding entity. However, the hypothecation of such interests or their subjection to an option agreement does not constitute a transfer unless the hypothecated interest is seized for non-payment or the option is exercised, at which point a taxable transfer is deemed to occur.
Section 30C(3) of the Capital Gains Act formally imposes a special capital gains tax on the value of any transaction in which shares or interests in a landholding entity are transferred to another entity, individual, or partnership, whether domiciled within or outside Zimbabwe. The tax applies to transactions concluded both within Zimbabwe and abroad, underscoring the extraterritorial reach of the provision where Zimbabwean immovable property is concerned.
The tax becomes payable no later than 30 days after the date when the transfer is evidenced by an entry in the entity’s share register or by any definitive proof under the law of the country where the transaction occurred. This ensures that the obligation to pay arises promptly once legal ownership of the shares changes hands.
The rate of the special capital gains tax is set at 20 percent of the transaction value. It must be paid in United States dollars or the equivalent in any other foreign currency at the prevailing international cross rate of exchange at the time of transfer. The primary liability for payment rests with the transferee, the person or entity acquiring the shares. However, in default of payment by the transferee, the transferor entity becomes liable.
The Commissioner is granted limited discretion to extend the payment period for up to three months for good cause shown or to permit staggered payments over that period. This flexibility may provide relief in complex or high-value transactions where an immediate lump-sum payment could be challenging.
Payment of the special capital gains tax must be made to the Zimbabwe Revenue Authority, deposited with the custodian of the landholding entity’s share register in Zimbabwe, or paid to a depositary who mediated the transaction. The payment must be accompanied by a sworn affidavit detailing the consideration paid or payable, full particulars of both transferor and transferee entities or individuals, and disclosure of any beneficial owner or controller exerting significant influence over the transferee entity.
The disclosure requirements are extensive and signal a strong emphasis on transparency. By mandating detailed information on ownership, domicile, incorporation, and directorship, the law seeks to uncover complex corporate structures and ensure that ultimate controlling parties are identified.
In a further enforcement mechanism, the amendment provides that where ownership or title to shares or interests is disputed in legal proceedings before a Zimbabwean court, such ownership will not be deemed to have been transferred unless a tax clearance certificate is produced. The certificate must evidence payment of the special capital gains tax on the transaction. This provision effectively conditions legal recognition of share ownership on compliance with tax obligations.
The introduction of section 30C is widely interpreted as a response to practices where investors structured property transactions as share sales rather than direct transfers of land to avoid capital gains tax or transfer duties. By taxing indirect transfers, the Government aims to protect revenue and ensure that gains derived from Zimbabwean land assets are appropriately taxed, regardless of how the transaction is structured.
Hamudi is Tax Partner at Baker Tilly Central Africa, based in Harare, Zimbabwe. He can be contacted at +263 775 399 536 or simbarashe. hamudi@bakertilly.co.zw