Zimra unhappy with SMEs tax

08 May, 2016 - 00:05 0 Views
Zimra unhappy with SMEs tax Mr lucky Mutikane polishes some of the flower pots he sell in Msasa, Harare recently. - Picture: Innocent Makawa

The Sunday Mail

Enacy Mapakame
THE Zimbabwe Revenue Authority is concerned by low tax compliance in the informal sector and has committed itself to continue engaging small and medium-sized enterprises.
SMEs are obliged to pay presumptive tax, whose rates depend on their specific economic sectors.
Zimra board secretary and legal and corporate services director Ms Florence Jambwa said there were difficulties in collecting taxes from the informal sector as some of the enterprises were itinerant.
“Compliance levels in this sector have not been very impressive over the years mainly due to lack of company record keeping by most of them and also lack of fixed places of business operations,” said Ms Jambwa last week, adding: “The authority continues to engage the informal sector to raise awareness on tax obligations through taxpayer education, workshops and stakeholder engagements so as to increase compliance levels in all sectors of the economy.”
Zimra is now working with local authorities, the Ministry of Transport and Infrastructure Development and the Registrar of Companies to ensure registration for tax purposes.
At the 2016 Zimbabwe International Trade Fair in Bulawayo, SMEs and Co-operatives Development Minister Sithembiso Nyoni implored the tax authority to come up with incentives to encourage voluntary compliance.
SMEs largely view tax as an additional and unwanted cost to business.
“We are working with Zimra on the best way of working with (SMEs). They are afraid of Zimra because once they formalise, the tax man pounces on them. They say Zimra takes away their money.
“We are working with Zimra to negotiate with SMEs to be given tax holidays in the process of formalisation,” said Minister Nyoni.
Government believes SMEs can meaningfully contribute to the fiscus if their role in inclusive economic growth is recognised.
Tax expert Mr Tendai Mavima said there was need to simplify voluntary tax compliance.
“The current regime is a bit complex. For instance, the e-filing platform; not everyone in the informal sector is capable of doing that. Besides, if anyone comes voluntarily to register, (Zimra) do not need to be harsh with them,” said Mr Mavima.
Zimra has embarked on a tax management system through installation of fiscal devices, linking taxpayer systems to the authority’s tax management system. “The tax management system programme will ensure real time transmission of transactional data to Zimra for auditing and other checks,” added Ms Jambwa.
Last year, net revenue collection fell three percent to US$3,5 billion from US$3,6 billion in 2014. It was, however, above the revised target of US$3,46 billion. The initial target for the year was US$3,76 billion.
Individual tax contributed the most (22 percent of annual revenue collections), followed by excise duty (20 percent), VAT on local sales (16 percent), VAT on imports (13 percent), company tax (12 percent) and customs duty (10 percent).
Individual tax contributed US$778 million against a target of US$835 million while excise duty brought in US$714,22 million against a target of US$590 million. VAT on local sales contributed US$547 million against US$641 million, and VAT on imports US$441 million against US$410 million. Company tax contributions were US$424,6 million against a US$448 target, and customs duty generated US$337,2 million, missing the US$390 million target.
Ms Jambwa said where necessary the authority would use coercive measures to encourage compliance.
“Tax legislation obliges taxpayers to remit taxes due to the Commissioner-General within prescribed times. When a taxpayer fails to comply with that law, the authority uses persuasion by sending reminders to encourage voluntary compliance and will only resort to coercive measures as a last resort where taxpayers remain uncooperative,” said Ms Jambwa.
The measures include garnishee orders, attachment of property and prosecution.

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