The Sunday Mail
Livingstone Marufu —
THE Zimbabwe Revenue Authority (Zimra) is giving small to medium scale enterprises (SMEs) until June this year to register for tax purposes before they begin to impose stiff penalties for non-compliance.
There is a growing push to ensure informal businesses start contributing to tax revenues. Small businesses that cannot qualify for the various tax categories stipulated by Zimra are usually obliged to pay presumptive tax, which, essentially, is tax levied on presumed income.
Zimra’s acting Commissioner-General Mr Happias Kuzvinzwa told The Sunday Mail Business that SMEs had to take full advantage of the six-month window in order to avoid inconveniences that might arise after the deadline lapses.
“We urge all the SMEs to register by June 2017 in a bid to broaden our tax base and at the same time speed up fiscalisation project that was introduced in 2010 to enhance revenue collections through plugging leakages and minimising tax fraud.
“After the first six months, we will then look back to see how many have complied and how many haven’t, then we take it from there.
“When you are called by an authority and you choose not to come, we will come for you when the time comes. It will be difficult for you (to register) when the doors are shut,” said Mr Kuzvinzwa.
He noted that there are tax concessions such as the Special Initial Allowance (SIA) that are meant to facilitate the growth of SMEs.
Usually, qualifying enterprises are entitled to a 100 percent SIA over a three-year period.
The first 50 percent is applicable within the first year, while the remainder is spread over the next two years of assessment.
SMEs registered for income tax purposes with Zimra are eligible for applicable deductions provided for in the Income Tax Act in respect of expenditure related to their business operations.
Despite the tax man coming up with incentives to encourage voluntary compliance, SMEs largely view tax as an additional and unwanted cost to business.
Government believes SMEs can meaningfully contribute to the fiscus if their role in inclusive economic growth is recognised.
Taxes that are applicable to SMEs include presumptive tax, income tax, value added tax, pay as you earn (PAYE) and withholding tax. The Ministry of Small and Medium Enterprises is also compiling a database of an estimated 5,8 million businesses in the informal sector with a view of mainstreaming their operations.
Zimra is aggressively mobilising revenues in view of outstanding Government obligations.
Its new tax management system, which relies on fiscal devices that link Zimra servers and companies’ electronic registers, has been able to provide a fool-proof system that prevents tax evasion.
Linking fiscal devices to the Zimra servers enables real-time transmission of transaction data to the tax man. It also improves monitoring of taxable transactions and curbs under-declarations.
Revenue collections have resultantly improved. Mr Kuzvinzwa says, “Fiscalisation has received a major boost after the Ministry of Finance and Economic Development has invited interested companies to submit applications for the supply of electronic fiscal devices (EFDs).
“The fiscalisation project, which initially targeted Value Added Tax (VAT) registered operators in category C — whose annual turnover exceeds US$240 000 — has now been extended to cover all Value Added Tax registered operators.
“The extension of fiscalisation to VAT categories A, B and D means that all clients whose annual turnover exceeds US$60 000 are expected to register for Value Added Tax and to fiscalise.”
The demand for additional fiscal devices has prompted authorities to broaden its list of suppliers. As more suppliers join the fray, prices for the gadgets are expected to drop as well.
Currently, there are only six approved suppliers. Fiscalisation is considered to be one of the key undertakings that are likely to augment revenue collections.
The electronic cargo tracking system, which is designed to eliminate transit fraud, is now operational and is beginning to bear fruit.
