Harare — THE proposed reform of the country's income tax system in the 2010 National Budget statement will be done within the next three years.

Finance Minister Tendai Biti told captains of industry during a Business Council of Zimbabwe post-budget breakfast meeting that the process, which has already started, should be complete by 2012.

"We have done the most important thing and next year we will move on to the next stage. We felt that we needed to give ourselves time to complete the process," he said.

Last Wednesday, Minister Biti said that the country's Income Tax Act that was first promulgated in April 1967 should be reviewed as several amendments have been made to the Act had not changed its structure and Victorian language which the average taxpayer cannot fully comprehend.

The Act, he said, is thus far not in line with modern trends.

A Steering Committee on tax reform comprised of tax experts from Treasury, the Zimbabwe Revenue Authority and the private sector to oversee the redrafting of the new Income Tax Act in simplified language which taxpayers can easily comprehend.

The draft Income Tax Act, the minister said will also present an opportunity for a comprehensive review of complex areas of taxation such as long term insurance.

The review comes at a time when a number of African countries have over the past decade reformed their income tax systems and adopted modern Income Tax Legislation with a view to ensure compatibility with fundamental tax policy principles of simplicity, equity, neutrality and consistent with international best practices.

Meanwhile Mr Rameck Masaire, a partner at Ernest and Young who gave a critical analysis on the tax implication of the national budget hailed some of the ministers' tax reforms while making suggestions on others.

Of note, he said dates for the payment of VAT of the 10th of each month was not feasible and business would have desired to return to the old date, the 20th of each month since there will be congestion at Zimra.

However Minister Biti said that the 10th was only an indicative date and the onus was on companies to pay before the date and not to wait until the due date.

Mr Masaire also said there was need for Government to waiver duty on electronic tax registers, which companies should have by April, which will have to be imported into the country.

He also called for the harmonisation of the Zimra and Zimbabwe Investment Acts to enable some investors who registered under the export Processing Zones Authority Act that was repealed during the amalgamation of the Zimbabwe Investment Centre and the EPZA to enjoy the benefits of their tax holiday.

He also bemoaned what he called excessive powers and responsibilities that were bestowed on Zimra, which he believes, would be problematic given Zimra's capacity constraints.

KM Financial Solution chief executive, Mr Ken Mafukidze who gave a business perspective on the budget said that the budget was positive for business as it projected growth for the first time in over 10 years.

"We should look at the spirit in which the budget was crafted we can now look forward to a 4,7 percent growth in the economy, the challenge for business is how we can re-configure ourselves to drive this growth," he said.

He also said that the fact that the minister allocated US$500 million for infrastructure was a positive development as infrastructure is a key enabler for industry.

On mining taxation, Mr Mafukidze said taxes and royalties from the mining sector should be placed in a special fund and the funds used to construct national infrastructure.

He also commended the minister for being sensitive in the budget through the provision of safety nets as well as for reducing duty on small vehicles.

He however, raised concern on the prioritisation of wages ahead of infrastructure development and the creation of Constituency Development Funds, where he was concerned about accountability.

On CDF, he was of the opinion that the money could have been better used to strengthen existing structures instead of creating parallel structures.