SMEs propose a tax system based on turnover

FARAI Mutambanengwe, a leading voice in Zimbabwe’s small and medium enterprise sector, has proposed a turnover-based presumptive tax to simplify the tax regime for informal businesses.

The Zimbabwe Revenue Authority has had difficulty collecting taxes from small and medium enterprises (SMEs) due to their informality.

Last year, the Treasury created a specialized unit in charge of monitoring these operators.

“The challenges are complex. Trying to bring these informal actors into the tax system is difficult because they are often ignorant of tax issues,” Mutambanengwe, founder and CEO of the Zimbabwe Small and Medium Enterprises Association, told delegates attending the eighth annual tax conference that is being celebrated. at Victoria Falls.

“Even if they heard about tax announcements and packages, they may not have the business level or qualifications necessary to comply with tax regulations. Furthermore, there are political and corruption issues that make it virtually impossible to achieve sustainable taxation for informal actors or SMEs,” he stated.

“When it comes to collecting taxes from the informal sector, I think the first thing is to simplify the tax regime and create simple taxes. “Most countries have implemented taxes based on turnover.”

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Mutambanengwe added: “Similar to the IMTT (intermediate money transfer tax), having a turnover-based system makes it easier. We can have applications that can be used to make (paying taxes) easier even for those who don’t have much knowledge.

“This simplifies the process because trying to educate them about the current tax system will not only be difficult, but impossible, because most SME operators are semi-literate.”

He also suggested that the government should remove currency distortions and let the market determine the value of the currency and reduce the cost of compliance to make the formal sector attractive.

“We need to restore value chains, encourage business formation and encourage the growth of formal companies. Larger companies can employ accountants and tax advisors, and they follow the rules,” Mutambanengwe said.

He added that the economy needs fewer policies and more solutions to facilitate the transition from the informal to the formal sector.

“Most of the economy should be formalized. We need to simplify tax reforms, eliminate cross-border taxes and licenses and focus on what works. “SMEs will be pressured to go informal and tax revenues will decrease if we continue with these policies,” he stated.

“We need fewer policies and more solutions. “Political economy is creating problems that modern economics cannot handle.”

The eighth annual WTS Tax Matrix tax conference began on Wednesday in Victoria Falls and will be held under the theme Navigating the Complexities of Modern Taxation.

The three-day conference, organized by WTS Tax Matrix Academy, brought together local experts and others from Zambia, South Africa, Namibia and Nigeria.

The program covers a wide range of topics including fiscal and legislative sustainability, current tax developments in Zimbabwe and their impacts, tax audit challenges, tax litigation trends and developments in Zimbabwe and Africa.

The annual tax conference also marks the sixth anniversary of Matrix Tax School, which this year transitioned to WTS Tax Matrix Academy after a strategic partnership with WTS Global.

Ends today.

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