SMEs register for tax amnesty

SMEs register for tax amnesty
Zimra chairperson Willia Bonyongwe

Zimra chairperson Willia Bonyongwe

By Ndakaziva Majaka
Deputy Business Editor

THE Zimbabwe Revenue Authority (Zimra) says over 15 000 small to medium enterprises (SMEs) registered their businesses during a tax amnesty window granted to the sector to regularise their tax records to avoid penalties.
The tax collector’s acting commissioner general, Happias Kuzvinzwa, said the window — which saw the taxman “turning a blind eye to past tax transgressions” — had seen the country’s informal businesses coming forward to formalise their operations and register with Zimra.
Zimra has been widening its tax net to boost collections to meet government’s cash requirements, which have largely been used to meet recurrent expenditure, particularly civil servants’ salaries.
“We have had SMEs come forward to register. Of course some did not come forward, but at the moment we have over 15 000 who have come. This is a good development for us as Zimra because we hope it will translate to more collections. We also hope more keep coming. Although the moratorium has lapsed, we will forgive all,” Kuzvinzwa told a Parliamentary conference held in the capital last week.
SMEs are obliged to pay presumptive tax, whose rates depend on their specific economic sectors.
In the half year report, Zimra chairperson Willia Bonyongwe said close to 13 000 SMEs had come forward in the first six months.
“The moratorium offered to SMEs in collaboration with the Ministry of Small and Medium Enterprises in January expired on 30th June 2017. It was successful in that Zimra registered 12 992 taxpayers. However, it is common knowledge that a lot more businesses are not tax compliant and Zimra will continue widening the tax net,” she said.
Zimbabwe’s informal sector has been expanding over the years, absorbing the bulk of retrenched and unemployed graduates.
However, this expansion has presented challenges to Zimra, which has been struggling to meet tax collection targets over the past few years.
In light of the pressure, the agency has resorted to punitive measures that include garnishing bank accounts of defaulting clients, attachment of property and prosecution to force tax compliance.
Zimra issued a similar tax amnesty for defaulting corporate clients in 2015.
The amnesty period lapsed in March 2016, with Zimra calling for tax defaulters to negotiate for payment plans to meet obligations.
Kuzvinzwa is on record saying Zimra has begun criminalising tax defaulters on the back of a ballooning debt book as the country’s economic condition continues to deteriorate.
Annual gross collections for 2016 amounted to $3,4 billion, 96 percent of the targeted $3,6 billion.
However, the agency surpassed its first half collections this year, with gross collections for the six months to June 30, 20176 at $1,7 billion, 8,05 percent above the target of $1,6 billion.
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