AAG to lobby for tax exemption to struggling firms

Oliver Kazunga Acting Business Editor
EMPOWERMENT body Affirmative Action Group (AAG) says the Zimbabwe Revenue Authority has agreed to allow businesses in Bulawayo with tax arrears to secure 2014 tax clearance certificates and make payment plans to settle outstanding tax obligations.Towards the end of last year, the Zimbabwe Revenue Authority (Zimra) launched a tax blitz in Bulawayo to compel tax evaders to comply with the statutory obligations.
Against this background, AAG in Bulawayo wanted to meet Finance and Economic Development Minister Patrick Chinamasa to request that struggling firms be exempt from paying tax.

“As you might be aware that we were planning to meet the Minister of Finance and Economic Development (Chinamasa) over tax exemption but this has since been cancelled as a result of new developments. Zimra has agreed to allow businesses that are not up to date with their tax obligations to secure 2014 tax clearance certificates,” said AAG national vice-president Sam Ncube in an interview last week.

“While the authority has allowed the businesses with outstanding tax remittances to secure the 2014 tax clearance certificates, the entities are required to make payment plans with the revenue authority,” he said.

Due to liquidity constraints, antiquated machinery, power challenges and competition from cheap imports, local industries are struggling to produce competitive products.
Before the adoption of a multicurrency system in February 2009, the country’s manufacturing sector was operating at an average of 10 percent capacity utilisation with government setting a target to achieve 60 percent capacity utilisation by the end of the same year.

However, the manufacturing sector which requires an estimated $8 billion working capital, is yet to achieve the 60 percent capacity.
According to the Confederation of Zimbabwe Industries (CZI), the manufacturing sector last year recorded a 39.6 percent capacity utilisation compared to 44.9 percent in 2012.

The industrial representative body attributed the decline in capacity utilisation levels among other fundamentals to liquidity crunch, power challenges and obsolete equipment.