Monday, April 29, 2019

Taxation system burden SMEs

Government has said the taxation system and corruption were burdening the informal sector and has called for the Zimbabwe Revenue Authority to address concerns raised to improve compliance.

Women Affairs, Community, Small and Medium Enterprise Development Minister, Sithembiso Nyoni, said the low tax compliance by SMEs was linked to an unfavorable tax system in the country.

She was speaking at the 2019 MSME workshop on formalization and taxation issues for SMEs at the just ended Zimbabwe International Trade Fair in Bulawayo recently.

“The SMEs are not refusing to pay taxes, all they are calling for is a simplified sector by sector kind of taxation. They also want to see benefit for their tax,” she said.

“The SMEs sector has highlighted that the low tax compliance is linked to an unfavorable tax system in Zimbabwe that is perceived as burdensome to SMEs.”

Among the factors, Nyoni said, were lack of confidence in the tax system, higher taxation, lack of awareness and sensitization of the tax system, financial constraints, low revenue yields and incidences of corruption by tax officials.

She said though authorities were collecting taxes from the informal sector, little was being done to ensure the SMEs benefit.

“There is a lot of tax being collected by local authorities from SMEs and a lot of the local authorities are being run by SMEs, yet there is nothing to show for investments towards the sector. But now, we need to take responsibility to plough back that money we are collecting.”

Nyoni said though the informal sector had played an important role in the economy, there were challenges affecting capacity to grow businesses and meaningfully contribute to the economic growth.

ZIMRA previously reported low tax compliance and revenue collection among SMEs which constituted 70% of all registered tax payers but contributing 20%.