BEFORE the enactment of a law in 2010 that compelled businesses to use electronic fiscalised cash registers and fiscal memory devices with the objective of plugging leakages in value-added tax (VAT), the Government met with fierce resistance from business lobby groups over the exercise.
They raised one excuse after the other to seemingly dissuade the Government from proceeding with the initiative.
These gadgets were revolutionary, as they were meant to record transactions and other tax information on the read-only fiscal memory at the time of sale for VAT purposes.
Most importantly, the use of fiscal devices provided a transparent foolproof mechanism that ensured that the Zimbabwe Revenue Authority (Zimra) got the rightful and correct dues owed to it.
From its systems, Zimra could automatically know how much it was owed and by which institution as transactions were captured in real-time through its servers.
The protests from business were not so much because they did not want to use the devices but more on the question of who, between business and the Government, was supposed to foot the bill, as they considered this an inconvenient added cost.
After exhaustive debates, the authorities decided to bite the bullet and introduced Statutory Instrument 104 of 2010 on June 8, 2010.
But business did not give up, as they also wanted the procurement of the devices to be extended to more suppliers other than those specified by the Government.
“It is important to point out that business is not grumbling about fiscalisation. It is accepted that it (fiscalisation) is in the national interest,” the then-Employers Confederation of Zimbabwe president Mr Joe Kahwema was quoted as saying by our sister paper, the Chronicle, in 2017.
“We make the humble suggestion above in the interest of protecting business from profiteering and unsustainable cash outlays in these difficult times.
“It is our sincere hope that both Zimra and the accounting ministry will consider the request and either explain why things have to be like this or allow businesspeople to acquire standard fiscal devices where they can get them for the best value for money.”
The Government, however, stuck to its guns.
The result was an increase in tax collections.
But what is notable is the fact that, despite empirical evidence that provide that fiscalisation could help to plug the gaps and loopholes in tax collection, it was not carried all the way through.
As initially envisaged, the programme was supposed to be broadened to ultimately cover small businesses and the informal sector, which is supposedly the hub of considerable economic activities.
So, the recent move by the Ministry of Finance, Economic Development and Investment Promotion to make it mandatory for the informal sector to use point-of-sale machines should also be tied to an elaborate programme for it to use fiscal devices as well.
Not only does this help the Government through enhanced tax collections, but it also helps small businesses as well through generating accurate recording of sales transactions, which can help build trust with customers and suppliers.
With better record-keeping, informal businesses can also more easily access loans and other financial services, as they can provide accurate financial statements to banks and other financial institutions.
Furthermore, being part of the formal economy can open up new market opportunities for informal businesses, including the ability to participate in Government tenders and contracts.
But there is need to raise awareness in the informal sector on the benefits that are likely to accrue from embracing this programme.
It is, however, comforting that Zimra has already launched what it calls the virtual fiscalisation platform and the Fiscalisation Data Management System (FDMS) to offer tailored solutions for micro and small enterprises.
Through the system, businesses with existing computer systems; for example, enterprises with invoicing, accounting or sales transaction systems, can integrate these directly with the Zimra FDMS using open application programming interfaces (APIs), ensuring compliance with fiscalisation requirements.
Happily, over 3 000 taxpayers have already interfaced successfully with the platform.
And for businesses without computer systems; for instance, micro and small enterprises lacking such systems, Zimra is finalising mobile point-of-sale applications, which are set to be launched by March 31, 2025.
So, the Government is on the right path. But it must go the whole hog to ensure that the system is effectively and efficiently implemented, lest all these efforts come to nought.
As the saying goes, nothing is certain except death and taxes.
It is time the informal sector comes to the party.
Govt should go all out to rehabilitate informal sector
BEFORE the enactment of a law in 2010 that compelled businesses to use electronic fiscalised cash registers and fiscal memory devices with the objective of plugging leakages in value-added tax (VAT), the Government met with fierce resistance from business lobby groups over the exercise.
They raised one excuse after the other to seemingly dissuade the Government from proceeding with the initiative.
These gadgets were revolutionary, as they were meant to record transactions and other tax information on the read-only fiscal memory at the time of sale for VAT purposes.
Most importantly, the use of fiscal devices provided a transparent foolproof mechanism that ensured that the Zimbabwe Revenue Authority (Zimra) got the rightful and correct dues owed to it.
From its systems, Zimra could automatically know how much it was owed and by which institution as transactions were captured in real-time through its servers.
The protests from business were not so much because they did not want to use the devices but more on the question of who, between business and the Government, was supposed to foot the bill, as they considered this an inconvenient added cost.
After exhaustive debates, the authorities decided to bite the bullet and introduced Statutory Instrument 104 of 2010 on June 8, 2010.
But business did not give up, as they also wanted the procurement of the devices to be extended to more suppliers other than those specified by the Government.
“It is important to point out that business is not grumbling about fiscalisation. It is accepted that it (fiscalisation) is in the national interest,” the then-Employers Confederation of Zimbabwe president Mr Joe Kahwema was quoted as saying by our sister paper, the Chronicle, in 2017.
“We make the humble suggestion above in the interest of protecting business from profiteering and unsustainable cash outlays in these difficult times.
“It is our sincere hope that both Zimra and the accounting ministry will consider the request and either explain why things have to be like this or allow businesspeople to acquire standard fiscal devices where they can get them for the best value for money.”
The Government, however, stuck to its guns.
The result was an increase in tax collections.
But what is notable is the fact that, despite empirical evidence that provide that fiscalisation could help to plug the gaps and loopholes in tax collection, it was not carried all the way through.
As initially envisaged, the programme was supposed to be broadened to ultimately cover small businesses and the informal sector, which is supposedly the hub of considerable economic activities.
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So, the recent move by the Ministry of Finance, Economic Development and Investment Promotion to make it mandatory for the informal sector to use point-of-sale machines should also be tied to an elaborate programme for it to use fiscal devices as well.
Not only does this help the Government through enhanced tax collections, but it also helps small businesses as well through generating accurate recording of sales transactions, which can help build trust with customers and suppliers.
With better record-keeping, informal businesses can also more easily access loans and other financial services, as they can provide accurate financial statements to banks and other financial institutions.
Furthermore, being part of the formal economy can open up new market opportunities for informal businesses, including the ability to participate in Government tenders and contracts.
But there is need to raise awareness in the informal sector on the benefits that are likely to accrue from embracing this programme.
It is, however, comforting that Zimra has already launched what it calls the virtual fiscalisation platform and the Fiscalisation Data Management System (FDMS) to offer tailored solutions for micro and small enterprises.
Through the system, businesses with existing computer systems; for example, enterprises with invoicing, accounting or sales transaction systems, can integrate these directly with the Zimra FDMS using open application programming interfaces (APIs), ensuring compliance with fiscalisation requirements.
Happily, over 3 000 taxpayers have already interfaced successfully with the platform.
And for businesses without computer systems; for instance, micro and small enterprises lacking such systems, Zimra is finalising mobile point-of-sale applications, which are set to be launched by March 31, 2025.
So, the Government is on the right path. But it must go the whole hog to ensure that the system is effectively and efficiently implemented, lest all these efforts come to nought.
As the saying goes, nothing is certain except death and taxes.
It is time the informal sector comes to the party.
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