National News

Higher taxes hurt business

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Business leaders have expressed concern over high taxes companies are subjected to saying the tax regime was hurting business.

They said the Finance and Economic Development Minister, Mthuli Ncube’s Mid Term Budget Review statement did not make a meaningful attempt to expand the tax base which has dwindled.

‘’What we have seen is that the Minister of Finance and Economic Development (Mthuli Ncube) seem to continue to want to increase taxes on the 30% of the economy instead of expanding the sources of revenue by bringing on board the informal sector it has been one of the key areas of discussions,’’ the president of the Confederation of Zimbabwe Retailers Denford Mutashu said.

He added: “On the issue of high informalisation I think as a country it’s high time we begin to look at how we can take advantage of the high informalisation. In our approach I think we should not properly go in there with heavy handedness but I think we should bring them on board and ensure that they also participate and contribute to the greater good of national development.”

The Zimbabwe National Chamber of Commerce president Mike Kamungeremu said business was overtaxed.

“In general we feel that we are overtaxed as businesses because you realise that as we transact we are paying that 2% tax that actually was increased to 4% for foreign currency local transactions. And when you then add the VAT to that and the 24% corporate tax to that you see that the tax regime is too much for businesses,” Kamungeremu said.

He added: ‘’There is so much tax if you look at the reduction of that (VAT) threshold it puts more and more people in that bracket as we have always lobbied for. However  the 4% IMTT and the 2%  we  feel it has served its purpose and it’s high time the minister should have considered dropping it  but he maintained it despite widening the base for collecting VAT.”

He said the ripple effect of that tax at every stage of the value chain will be huge for the end consumer who will then pay for that product which makes local products uncompetitive due to the cost build up.

He added that taxes in Zimbabwe are very complicated and should be further simplified for most businesses to comply without them being tax evaders.

As at 30 June 2022, ZIMRA was owed ZWL$23bn in unpaid taxes as businesses failed to comply with the heavy taxes.

Miners were also not spared by Ncube as he benchmarked the 1.2% miners’ contribution of GDP in direct taxes, with the regional average of 2%.

Royalties for platinum miners were increased to 5% from 2.5%, the same with lithium producers who will also pay a 5% royalty, starting in January 2023

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