Vusumuzi Dube
Judith Phiri, Business Reporter
FINANCE, Economic Development and Invest Promotion Minister, Professor Mthuli Ncube has reviewed some of the tax measures to provide relief to taxpayers and enhance tax administration.
Presenting the Mid-Term Budget review in Parliament on Thursday, the Minister said the tax and revenue measures he was proposing also sought to augment recently introduced monetary policy measures, as well as consolidate gains realised from existing measures.
On presumptive tax, he said: “The dynamic nature of the economy requires a review of the presumptive tax regime, cognizant of the significant contribution of such operators to the Gross Domestic Product (GDP). In view of the above, I propose to review the presumptive tax structure downwards, in order to provide relief, thereby enhancing tax compliance.”
Prof Ncube said on Excise Duty on Electronic Cigarettes, in order to curb the negative externalities associated with the consumption of electronic cigarettes, he was proposing to introduce Excise Duty at the rate of US$0.5 per ml of contents of every electronic cigarette product.
He said the payment of taxes and user fees will be in local currency following the introduction of the new currency, the Zimbabwe Gold (ZiG) in April.
“It has already started bearing fruits in anchoring price and exchange rate stability, preserving currency value and rebuilding market confidence. There is need to create more demand for the use of ZiG through fiscal policy measures,” he added.
On corporate income tax, the Minister said the Government, in June 2024, allowed companies to account for Corporate Income Tax in both local and foreign currencies on a 50:50 basis, or with the option to settle such obligations in line with the proportions in which income is earned.
He proposed to amend legislation to regularize the intervention, while going forward, he proposed to amend legislation and compel any corporate whose revenue exceeds 50 percent in foreign currency to account for Corporate Income Tax on a 50:50 basis.
“Furthermore, where a company’s revenue exceeds 50 percent in local currency, tax shall be payable proportionately in the currency of trade thereof.”
Prof Ncube said in order to promote the circulation of the ZiG within banking channels, curtail practices of money laundering, thereby combating financing of terrorism, he was proposing payment of all presumptive taxes in local currency, regardless of currency of trade.
On foreign currency dutiable products, he said in order to promote usage of the local currency, he proposed payment of customs duty in local currency on selected products.
The Minister added: “Going forward, all user fees for Government services shall exclusively be payable in local currency unless, specifically provided otherwise.”
He said following the recent changes in Value Added Tax (VAT) legislation, where live animals and meat is now standard rated, the industry has experienced a decline in demand due to low disposable incomes, which is attributed to the El Nino induced drought and increased informalisation.
Prof Ncube said in order to encourage formal trade, to restore demand of meat products, he was proposing to exempt live cattle, pigs, goats, sheep and bovine semen from VAT, while also exempting poultry meat and kapenta from VAT.
On special surtax on beverages sugar content, the Minister said in view of the need to provide relief to some businesses, he proposed to waive the tax payable for the period 1 January, 2024, to 8 February, 2024.
On transit fraud, he said: “Despite introduction of the Electronic Cargo Tracking System, rampant cases of transit fraud continue unabated, hence, the need to curb such illicit practices. I, therefore, propose to secure duty and levies on fuel imported under Removal in Transit Facility, by imposing payment of duty at the Port of Entry. Such duty and levies shall be recovered on acquittal at the Port of Exit.”
Prof Ncube said the measure, which takes effect from 1st August, 2024 and will not apply on fuel uplifted from National Oil Infrastructure Company, Msasa depot.
He said the Zimbabwe Revenue Authority (Zimra) was directed to manage the duty refund process efficiently through dedicated bank accounts.
The Minister said cognisant of the opportunity by operators to under-declare fuel imports, as well as abuse of the Removal in Transit Facility, he was proposing to introduce mandatory Fiscalisation of domestic fuel sales, with effect from November 1, 2024.
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