THE Parliamentary Portfolio Committee on Small and Medium Enterprises (SMEs) has revealed that 85% of them are illegal and operating outside regulations.
BY VENERANDA LANGA
A report on the operational environment and economic contribution of SMEs and the informal sector, released recently by the committee, said there was resistance by SMEs to formalise their operations due to fear that this would lead to higher costs and loss of revenue.
“The committee noted with concern that 85% of SMEs are informal, hence, are operating outside the laws and regulations of the country, and there is no doubt that Treasury and other revenue collecting agencies are being prejudiced by the non-remittance of taxes, levies and other charges from the sector,” the report by the Dorothy Mhangami-led committee said.
“Resistance to formalise is further worsened by the relentless and forceful manner of revenue collection by the different agencies, such as the Zimbabwe Revenue Authority and local authorities.”
SMEs also had reservations over the multiplicity of regulatory requirements for starting a business, lack of understanding of laws governing SMEs and lack of information from government departments.
The committee said women accounted for 53% of SMEs entrepreneurs. “Furthermore, SME and Co-operative Development minister Sithembiso Nyoni told the committee that the country does not have a national database of SMEs, making it difficult for policymakers to develop targeted sectoral policies to encourage formalisation.”
SMEs were finding it difficult to understand taxation laws with the majority of them not able to afford tax consultants.
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SMEs were also charged high presumptive taxes of up to $1 500 per quarter for operations such as hair salons.
