Taxman to tighten screws on informal sector

Sunday Mail Reporter
The Zimbabwe Revenue Authority (Zimra) says it will tighten the noose on the informal sector as it seeks to widen its revenue collection base.
This follows reports that US$7,4 billion is circulating in the informal sector at a time the formal sector is starved of liquidity. In his 2014 national budget, Finance and Economic Development Minister Patrick Chinamasa set this year’s revenue target at US$4,4 billion, but there are concerns that this figure may not be achieved.

As Zimra prepares to release its first quarter performance report this month, Zimra’s director for legal and corporate services Ms Florence Jambwa disclosed that the authority had noted the growth of the informal sector and has responded by coming up with a number of initiatives aimed at widening the tax net.

She said some of the measures include police patrols, educational campaigns, border patrols and cargo monitoring.
“There are various measures which we use in mobilising tax revenues and these are not exhaustive but some of them are as follows: awareness and educational programmes for our clients to understand their legal obligations in terms of all fiscal laws which we administer, border patrols, audits, cargo monitoring for high risk cargo (in transit) and roadblocks in collaboration and co-operation with law enforcement agents,” she said.
She hinted other measures to improve revenue collection will be announced in Zimra’s first quarter report later this month.

Ms Jambwa added that Zimra is working on an overall strategy to formalise the informal sector.
“The overall strategy of Zimra in bringing in the informal sector into the tax net is education of some of the taxpayers who may not be fully appreciating their legal obligations.

“Over the years, such educational programmes have been carried out and these come in various forms such as targeted groups or general engagement. We also have presumptive taxes under domestic taxes which are final taxes making them simplified for the targeted sectors to comply with.

“With customs, we do have a Simplified Trade Regime also targeted at small traders so that they do not get subjected to the rigorous processes associated with the normal commercial importation of goods and services. In addition to this, informal trading is “informal”, as the expression sounds, so for sustainable contribution to the fiscus by these growing businesses, there is need for them to have proper accounting systems. We are therefore working together with relevant stakeholders and regulatory authorities to find a lasting solution to formalisation of the informal sector.”

Last week, experts at a Sapes dialogue forum that was held in Harare estimated that lax tax rules are costing Zimbabwe about US$3 billion annually as the country had now become the source of hard currency for the Sadc region.

In a presentation made in Parliament last week, Small and Medium Scale Enterprises Minister Sithembiso Nyoni disclosed that about US$7,4 billion was circulating in the informal sector.

She said a National Steering Committee comprising of all relevant ministries and agencies that have to do with licensing, taxation collection of levies, social security and the regulation of SMEs had been set up by Government in fulfilment of the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (ZimAsset).

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