THE public, business and tax experts yesterday attacked the proposed introduction of the residence-based taxation system, saying it will discourage remittances by Zimbabweans abroad.
REPORT BY VENERANDA LANGA
This followed a public hearing by the Budget, Finance and Investment Promotion Parliamentary Committee chaired by Makoni West MP Webber Chinyadza which is currently gathering views on the Bill.
The Income Tax Bill will replace the Income Tax Act (Chapter 23:06).
Among the major changes contained in the Bill will be the shift from the source-based system income taxation where tax was levied on income originated in Zimbabwe to a residence-based one, where the taxable income is from income earned from all geographical sources within or outside Zimbabwe.
Under the new measures, money remitted from the Diaspora would be subjected to tax.
Institute of Chartered Accountants of Zimbabwe (ICAZ) Tax Committee member Peter Cawood said taxing of residents and the definition of “residence” in the proposed Bill should be clarified.
“Is it the intention of this legislation that even money sent to relatives is going to be taxed? What is going to happen is that Diasporans are not going to send money and foreigners will not come to Zimbabwe because of the taxes,” Cawood said.
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“Under this new law, all loans are also going to be subject to taxation and it is a copy and paste piece of legislation from practices of some countries such as Sierra Leone.”
Harare citizen Dieter Balzer said as part of measures to widen the tax base, MPs and civil servants should also be subjected to taxes.
“It will show leadership qualities of these institutions and make people accountable. We are happy the tax credit of 50% on medical expenses has been maintained, but we want this credit to be increased so that we have a healthy country. This could also be extended to education because it is one thing we want to invest in,” he said.
Confederation of Zimbabwe Industries economics and banking chairman Jimmy Psillos suggested the setting up of disputes regulatory body to reduce litigation cases to do with taxation.
Chinyadza said after the public hearings, the committee would compile a report to be presented to the House, as well as invite Finance minister Tendai Biti to appear before the committee to consider suggestions from the public.
