A LEADING tax expert has advised local companies to push for changes to the Income Tax Bill amid concerns that the ongoing tax reforms may affect their operations.
Report by Victoria Mtomba
The Bill will become law in January 2014 and will replace the Income Tax Act which has been operational for the past 46 years.
Speaking at the Zimbabwe Independent Dialogue yesterday, Ernst&Young partner Maxwell Mangoro said the new law would grant the Zimbabwe Revenue Authority (Zimra) sweeping powers to widen tax bands.
“It’s a good law to Zimra as it will have more powers while it might not be good for business,” he said.
“We are going to have a busy year while we are trying to fix our tax problems.
“If we wait until it becomes law it can be a big problem.
“All our recommendations should either be made through Confederation of Zimbabwe Industries and Zimbabwe National Chamber of Commerce or the Ministry of Finance.”
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Mangoro said although the Bill followed international best practices and had been adopted by Sierra Leone, Tanzania, Lesotho and Uganda, there was need for business to understand its implications.
He said major complaints about the Income Tax Bill related to the taxation of income on everyone residing in the country.
One is considered a resident when their physical presence in Zimbabwe exceeds an aggregate of 183 days in a year.
The new law states that if you are not a resident, you will only be taxed on income from within Zimbabwe only.
The law will subject income tax gains, awards and prizes to taxes. The Bill further states that income earned through corrupt means will also be taxed.
The Bill restricts expenditure in losses that are incurred in the production of income as compared to the current law that allows for the deduction of expenditure losses incurred for the purpose of trade or production of income as long as it is of a revenue nature.
Mangoro said under the new Bill, withholding tax was now the final tax, meaning that if one pays withholding tax on fees at 15% they don’t have to pay income tax on those fees.
Under the current dispensation non-resident Zimbabweans are levied withholding tax and make income tax returns to Zimra.
