Mthuli Ncube Introduces Rental Income Tax – Here Is How It Will Impact Tenants and Landlords

Mthuli Ncube Introduces Rental Income Tax

Finance Minister Mthuli Ncube has introduced a Rental Income Tax, part of several new taxes announced during his 2025 National Budget Statement proposal on 28 November 2024.

Delivered at the Parliament building in Mount Hampden, this new tax measure targets properties converted from residential to commercial use and mandates additional disclosures from companies using rented premises.

Also Read: Mthuli Ncube Introduces Fast Food Tax, Says Zimbabweans Need To Eat Healthier

Properties Converted for Business Use Face 25% Tax

The Rental Income Tax imposes a 25% rate on properties converted from residential to commercial use. Ncube detailed the changes in his budget address:

“Mr Speaker Sir, in order to enhance compliance, I propose that all properties that have been converted from residential to business properties be subject to Rental Income Tax at a rate of 25% and accounted separately by the Zimbabwe Revenue Authority.”

This move is aimed at ensuring transparency and increasing revenue collection from properties generating income through non-residential use.

Mandatory Disclosure for Companies Using Rented Premises

Companies and organisations renting premises are now required to disclose detailed information about their rental arrangements. Ncube explained:

“I propose that any company or organisation using rented premises be compelled to disclose to the Commissioner, the rental expense, the location and owner of the property for purposes of Rental Income Tax.”

Failure to comply will have significant financial implications.

“Any company or organisation that fails to declare the owner of the rented property will be precluded from claiming the rental expense against taxable income,” the Finance Minister added.

This measure seeks to tighten tax compliance while ensuring accurate records of taxable rental income.

Implications for Businesses and Property Owners

The introduction of the Rental Income Tax is expected to impact both landlords and businesses significantly.

By enforcing compliance and introducing penalties for non-disclosure, the Zimbabwe Revenue Authority (ZIMRA) aims to ensure fair taxation across the sector.

Ncube’s statement also highlights the broader intention of the policy:

“In addition, I propose that any company or organisation that fails to declare the owner of the rented property be precluded from claiming the rental expense against taxable income.”

The new tax aligns with other revenue-generating measures introduced in the budget, such as the fast food tax, a 10% betting tax on gamblers’ winnings, and a tax on plastics.

The full effect of the Rental Income Tax remains to be seen, but stakeholders anticipate rising rental costs as landlords pass on the tax burden to tenants. This new measure signals the government’s commitment to broadening the tax base and addressing compliance gaps.

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