‘Separate corporate social investment from taxation’

STAKEHOLDERS in the extractive sector have urged government to introduce mechanisms to separate corporate social investment and tax issues so that mining companies would not evade remitting their tax obligations to Treasury.

BY OBEY MANAYITI

A consortium of organisations, among them Law Society of Zimbabwe, Institute for Sustainability Africa (Insaf), Women in Politics Support Unit (Wipsu) and Urban Councils Association of Zimbabwe (Ucaz) is focussing on validation of the natural resources sector, trends in corporate social investment, gender participation and service delivery of local authorities.

After the validation exercise, a recommendation will then be tabled on many forums, including Parliament, so that the views expressed by the people will be factored in the new laws governing the sector.

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The initiative came amid reports that government was losing a lot of potential revenue as companies evaded paying taxes by claiming to have carried out some corporate social responsibility programmes.

“Social Corporate Investment (SCI) should be part and parcel of a company’s business model and even when building business strategy it should be incorporated because it helps build brands and manage risks,” Rodney Ndamba chief executive officer of Institute for Sustainability Africa (Insaf) said.

“However, we feel it should not substitute taxes, but should be an add on. Some companies are paying more on SCI, which is an allowable expense that also results in tax exemption.

“The trend of SCI has been going up since 2009, while taxes paid by major mining companies have been going down,” he added.

Tafadzwa Chikumbu of the African Forum and Network on Debt and Development (Afrodad) said, while CSI was important for community development, it should not replace the role of the State in providing public services to the community.

He said it would be absurd to allow companies to forego taxes in the name of CSI.

A development consultant working with the consortium Kudzai Chatiza said while ploughing back to be community is welcome, that shouldn’t replace tax.

“It’s important for companies to do CSI because it’s about good social citizenship. The challenge we have is that it should be regulated. People want to know what the companies are doing so that it becomes easier to monitor,” Chatiza said.

“CSI makes companies get tax credits from its obligations,” he said.

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