ZIMRA Defends Mthuli Ncube’s “Effective” 2% Transactional Tax

In submissions made before Parliament’s Budget and Finance Portfolio Committee on Monday, Zimra Commissioner-General Faith Mazani said the tax that many believe has turned into a burden for ordinary people could form the basis for the country’s tax reform.ny

GOVERNMENT tax collector the Zimbabwe Revenue Authority (Zimra) has defended the government’s 2% transactional tax introduced last October. “The 2% tax was received negatively by the public but from our tax structure and statistics, compliance has been very low.

“Very few people are paying taxes especially the registered ones. This has caused a huge fiscal deficit on the government part. We are hoping that if we can improve on our compliance, this will ease our tax structure but the government needs advice on this,” Mazani told the committee chaired by Zanu PF’s Felix Mhona.

She added that given Zimbabwe’s economy is now largely informal and Zimra needed such a tax in order to effectively collect revenues. However, representatives of different sectors of the economy called on the government to consider scrapping the 2% tax which they say has negatively affected business.

The 2% tax charged on all electronic transactions was introduced last year by Finance Minister Mthuli Ncube through a Statutory Instrument (SI) 205/2018 to help government cushion its revenue.

Zimbabwe National Chamber of Commerce chief executive officer Chris Mugaga said the 2% tax has always been too high for both businesses and the public at large and in some instances, some people and businesses were being double taxed.

“Removing this tax is the only option because it has always been too high. There is also a serious cost to business due to this tax. It is just too much,” said Mugaga. Confederation of Zimbabwe Industries president Henry Ruzvidzo bemoaned the high levels at which the manufacturing industry was deteriorating compared to last year adding the 2% tax had run its course.

“As much as we appreciate the reasons to support the 2% tax by Zimbabwe Revenue Authority (Zimra), it has run its course now as it amounts to double taxation for the taxpaying sectors,” Ruzvidzo stated. The High Court recently set aside the SI205/2018 which was used to introduce the 2% tax but the government had already incorporated it into the Finance Act making the ruling academic.

Source – New Zimbabwe