adminFINANCE and Economic Development Minister Patrick Chinamasa’s proposal to reduce export taxes has been applauded by tax experts who said the move would promote manufacturing of competitive products in the country.
Speaking at the Institute of Chartered Accountants of Zimbabwe (ICAZ) budget overview at a Bulawayo hotel on Friday last week, Deloitte Tax Manager Mr Abel Dube commended the move and encouraged the manufacturing sector to use the opportunity.
“The basic reason for coming up with such an incentive is meant to encourage the manufacturing sector to export more products. This again motivates local companies which can be small to medium enterprises to produce competitive products that are worthy to be exported,” said Mr Dube.
“The growth and development of the country is underpinned by improving production and export of goods and services through value addition and beneficiation, among other strategies aligned to cluster priorities under the Zim Asset programme,” said Minister Chinamasa in his 2015 budget presentation on Thursday last week.
“In recognition of the need to promote exports, Government put in place export incentive schemes which include duty drawback, inward processing rebate and reduced tax for companies that export more than 50 percent of manufacturing output.”
Minister Chinamasa proposed an introduction of lower corporate tax structure for exporting companies. Companies exporting a threshold of 30-40 percent and 41 to 50 percent will pay a corporate tax rate of 20 percent and 17,5 percent respectively. Companies exporting above 51 percent will be expected to pay 15 percent.
Participants at the post budget meeting commended the Minister’s move to extend the tax amnesty period from six to 15 months.
“The most exciting aspect of this budget in terms of taxes is the time frame introduced for tax amnesty. Where tax amnesty was introduced in countries like South Africa and France it only covered specific areas. But, because of the economic circumstances in the country, tax amnesty had to cover all sectors,” said Mr Dube.
In his budget presentation, Minister Chinamasa said tax payers had expressed concern over the period within which tax obligations should be settled hence undermining the effectiveness of the amnesty programme, particularly at a time most companies were experiencing cash flow challenges.
“I, therefore, propose to extend the time period for payment of tax under the tax amnesty programme from six to 15 months, in order to avail taxpayers adequate time to settle assessed tax,” he said.
Online Reporter