Reduce income tax thresholds — ICAZ

7
1326

THE Institute of Chartered Accountants of Zimbabwe (ICAZ)has proposed several changes to the country’s tax regime ahead of tomorrow’s national budget as the country looks up to Finance and Economic Development minister Patrick Chinamasa for post election measures to drive the economy.

Business Reporter

In a letter written to Finance secretary Willard Manungo recently, the country’s oldest accountancy organisation said treasury should lower income tax to boost domestic consumption against the backdrop of an underperforming economy.

Experts say the current income tax thresholds have
resulted in skills flight as professionals seek better employment opportunities outside the country.

ICAZ further proposed the postponement of the new Tax Act and the New Income Tax Act to 2015 from 2014.

ICAZ said the above should be implemented when all the grey areas have been cleared.

“To boost employment, there is need to consider bringing the rate of tax on employment income (which excludes 15% value added tax (VAT))down in line with the tax rates applicable to business income(which avoid VAT unless exempt services provided or cost which are mainly in the form of labour employment,” read the letter in part.

“Either corporate rate must be increased or employment rate be reduced.

“Preferably the latter as excessive payroll taxes increase employment costs, discourage employment of labour and make Zimbabwe’s labour intensive service or manufactured exports uncompetitive. Reduced labour costs will also increase taxable income.”

ICAZ also said that an allowable deduction be provided in the act for the costs of indigenisation compliance including the making of a donation to a community share ownership scheme.

Under the country’s empowerment laws, foreign-owned firms should sell 51% to locals. The body also said capital gains tax be exempted on the disposal of shares pursuant to compliance with indigenisation laws. Furthermore, that community share ownership schemes or trusts and employee trusts be exempted from the residents’ tax on dividends.

“This is necessary to align fiscal policy with government policy,” ICAZ said.

The accountancy body also called for the raising of VAT registration threshold to $240 000 per annum from $60 000 in line with the threshold for the registration of fiscal devices.

ICAZ also called for the reduction in $30 per day for penalty submission of returns as they are draconian.

“Penalties of 200% for VAT, PAYE income tax and other withholding taxes and three times the duty paid value for income tax must be reduced as they are prone to abuse and can become a trigger for corruption,” the report read.

7 COMMENTS

  1. THE $30 PER DAY PENALTY IS HIGHLY DISCOURAGING AND PROHIBITIVE TO FIRST COMERS IN BUSINESS. IT ENCOURAGES TAX EVASION LEADING TO LEAKAGES IN REVENUE.THE WORST THING IS THAT THERE IS NOT ENOUGH EDUCATION FOR NEW BUSINESS PEOPLE FROM ZIMRA. PLEASE BE EDUCATIVE AND ENCOURAGING AND YOU WILL HAVE RESPONSIBLE BUSINESSES. YOUR INTIMIDATORY APPROACH IS COUNTER PRODUCTIVE.

  2. TO MINISTER CHINAMASA

    HONOURABLE may you please write off the penalties for the $30 per day penalty and allow business to start afresh tatambura Baba tinzwireiwo ngoni.We are suffering minister please help.

  3. May the honourable minister help , just for this year buy scrapping the 30 dlr a day fine. We have a fine of over $3000 dollars yet we are owing workers salaries for over six months. Zvakatooma minister.

  4. Zimra yakuzvinyanya weduwe, hapana asiri kuziva kui zvinhu zvakaoma asi ndipo pavanoti 30 penalty for late submision of retrn asi ivo vachiona payment irimo mu system mavo. Minister pindiraio

  5. You guys how can you encourage people not to submit returns in time by pushing for reduction of penalties? you are the accountants and you are doing the returns, so what day do you want to do your job, any day , No. we want more money into the treasury now not later.

  6. honestly speaking who ever made the decision for the late submission of returns we shld question their intergrity. take for example I pay my dues on. time and only delay in submitting a return only to be penalised for that.hazvishandiba. some penalties are laspsing into thousands of dollar for many clients registered with zimra Bt I will tell you none of them wil pay up.
    this is one drive for corruption and scaring away for clients thus resulting in revenue loss.no wonder why we will be having pressure to meet revenue targets.
    my suggestion would be to scrap away the unrealistic 30 per day penalty and reduce it to maybe 2 at most.just imagine the millions lost already because of the penalty

  7. when business people comment can the relevant bodies hearken and change these ridiculous regulations at once to encourage more businesses to register and be legit. these penalties are just a means by someone who is not running a business to punish those who do, merely out of meanness. can the govt come out of its slumber and work with business sector to revive this economy

Comments are closed.