CAPTAINS of industry have called for a unified taxation system to reduce the burden of multiple taxes, as these multiple statutory obligations are now hindering business expansion, it has been revealed.
In May, the Zimbabwe National Chamber of Commerce (ZNCC) warned that the Zimbabwe Revenue Authority (Zimra) was engaged in an “aggressive” audit drive that keeps mounting cost pressures on firms and risks alienating compliant taxpayers.
This aggressive resource mobilisation campaign is because of dwindling revenue streams for the Treasury as the economy becomes more informalised.
However, amid other rising costs for the industry, these tax obligations are threatening business operations, with some firms either entering corporate rescue or closing shop.
Zimra recently revealed it is “unwavering” in its determination to meet the 2025 revenue target of raising the ZiG equivalent of US$$7,2 billion in tax collections this year, indicating an even further aggressive collections.
“We need to have taxes reduced. We need to have harmonisation. Actually, after this congress (ZNCC annual congress), we are going to push for consolidation of tax policies so that we have a single policy on taxes, without different taxes, like your VAT [value-added tax], your income tax, and all,” ZNCC chief executive officer Chris Mugaga told NewsDay Business on the sidelines of its annual congress held last week in Victoria Falls.
“We need just one tax rate, and we also need to push for slashing of taxes.”
Apart from taxes, businesses must already pay electricity alternative costs amid power cuts, cost-related exchange rate losses owing to currency volatility, import duties, consignment-based conformity assessment fees, logistics and transport expenses, high interest rates, commercial rents and municipal charges.
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The multiple tax obligations include VAT, pay as you earn, intermediate money transfer tax, forex surrender requirements, salary adjustments, and pension and National Social Security Authority contributions.
Companies also face legal and compliance costs, ICT and internet charges, software licensing fees, security services, insurance premiums, and hedging or contingency planning expenses related to economic challenges.
“The government is over-relying on taxation rather than expanding the economy to broaden its revenue base. Currently, only about 1 750 companies are consistently paying taxes, while many others are not contributing,” he said.
The shocking number is from thousands of registered firms, with most operating as small-to-medium enterprises that form the bulk of the informal sector, which generates an estimated US$14,2 billion in annual revenue, according to the central bank.
Mugaga also expressed concern over the influx of substandard products.
“I think what’s more important is for the standards of Zimbabwe to take a position regarding the fake products that have been flooding this market. We also need to work with informality, because it’s difficult to control a market where informality is squashed,” he said.
“So, let’s address the informal sector. Let’s also address the cost of doing business, because goods are expensive in Zimbabwe. People resort to substandard products as a way to shield themselves from poverty and its bargain.”
CBZ Holdings chairman Luxon Zembe echoed similar sentiments on substandard goods.
“The informal market and influence of these cheap products that are coming in, which are now killing formal businesses and undermining our own economy --- that is where the government should come in and be able to put policies that protect our local businesses from all these cheap things,” he said.
Zembe said this protects not only businesses, but the public as well.
“You can take it and buy it because it’s cheap, but it won’t last, and some of them are even dangerous because they are cheap, they are not properly made, and anything can happen,” he added.
