Zimbabwe: Call for Lenient Tax Regime

Bulawayo — iIndustry players have called on government to reduce penalties for late payment of taxes, saying the current penalty levels were draconian.

Speaking during pre-budget consultations by Finance Minister Tendai Biti in Bulawayo recently, tax experts and industry players said proposed amendments to tax laws should take into account the hostile operating environment in the country as well as the fact that people could make mistakes in computation of tax figures.

The Zimbabwe Revenue Authority (ZIMRA) has been penalising late tax payments and incorrect tax payments at 100 percent.

A Bulawayo tax consultant with Ernst &Young, Peter Mgodi, said the current penalty thresholds were inappropriate under the prevailing hard currency regime.

He said ZIMRA was not even lenient on businesses.

"The problem is you just make a simple error (and) ZIMRA charges you a 100 percent penalty, even if you go to say, look guys I think I made an error on that return, I am submitting an amended return, they don't care. They say 100 percent penalty," Mgodi said.

He said tax laws had to be made simple for easy comprehension by ordinary business people.

Tshidzanani Malaba, a Zimbabwe National Chamber of Commerce (ZNCC), Bulawayo chapter executive committee member, said the tax system was punitive and driving businesses into the informal sector.

"You are treated as if you are a criminal. It's like all of you are going wayward, you need to be tamed by certain laws. It's like you are supposed to be a perfect human being in your submission," said Malaba in his criticism of the tax regime.

He added: "It's those who comply, those who submit who make errors. In the process, they are punished more yet you have those who never walk into the ZIMRA offices for any reason, those who do not get anywhere closer, who operate informally and they are doing their business."

Malaba said it was important for Biti to widen government's tax base instead of overburdening few operating companies.

"The best way for government to widen the tax base would be actually to make a budget that is attractive to the informal sector, not a budget that pushes people to the informal sector; a budget that attracts the informal sector to formalise," Malaba said.

He said due to delays in payments between companies and their suppliers owing to the current liquidity crunch, businesses should be taxed on payment and not on invoices as is the case now.

ndustry players have called on government to reduce penalties for late payment of taxes, saying the current penalty levels were draconian.

Speaking during pre-budget consultations by Finance Minister Tendai Biti in Bulawayo recently, tax experts and industry players said proposed amendments to tax laws should take into account the hostile operating environment in the country as well as the fact that people could make mistakes in computation of tax figures.

The Zimbabwe Revenue Authority (ZIMRA) has been penalising late tax payments and incorrect tax payments at 100 percent.

A Bulawayo tax consultant with Ernst &Young, Peter Mgodi, said the current penalty thresholds were inappropriate under the prevailing hard currency regime.

He said ZIMRA was not even lenient on businesses.

"The problem is you just make a simple error (and) ZIMRA charges you a 100 percent penalty, even if you go to say, look guys I think I made an error on that return, I am submitting an amended return, they don't care. They say 100 percent penalty," Mgodi said.

He said tax laws had to be made simple for easy comprehension by ordinary business people.

Tshidzanani Malaba, a Zimbabwe National Chamber of Commerce (ZNCC), Bulawayo chapter executive committee member, said the tax system was punitive and driving businesses into the informal sector.

"You are treated as if you are a criminal. It's like all of you are going wayward, you need to be tamed by certain laws. It's like you are supposed to be a perfect human being in your submission," said Malaba in his criticism of the tax regime.

He added: "It's those who comply, those who submit who make errors. In the process, they are punished more yet you have those who never walk into the ZIMRA offices for any reason, those who do not get anywhere closer, who operate informally and they are doing their business."

Malaba said it was important for Biti to widen government's tax base instead of overburdening few operating companies.

"The best way for government to widen the tax base would be actually to make a budget that is attractive to the informal sector, not a budget that pushes people to the informal sector; a budget that attracts the informal sector to formalise," Malaba said.

He said due to delays in payments between companies and their suppliers owing to the current liquidity crunch, businesses should be taxed on payment and not on invoices as is the case now.

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