Online Reporter
THE Government is presently undertaking a sweeping deregulation and tax reform programme aimed at slashing regulatory fees, simplifying licensing procedures and dismantling bureaucratic hurdles that hinder the competitiveness of local businesses. Cabinet has since established a high-level committee to review the existing regulations and business fees. Our Reporter DEBRA MATABVU interviewed Permanent Secretary in the Ministry of Finance, Economic Development and Investment Promotion MR GEORGE GUVAMATANGA on the progress of the reform process.
**************
Q: What are the primary drivers behind the Government’s decision to undertake a comprehensive tax reform and deregulation programme?
A: As you are aware, the Second Republic has always been reform-minded, underpinned by the desire to improve the business environment as epitomised by the mantra “Zimbabwe is open for business”.
The reform agenda, therefore, dovetails with the broader vision to fundamentally transform the country into an upper middle-income country by 2030.
Central to the attainment of this vision is the ability to mobilise financial resources to anchor the development thrust.
Accordingly, the primary objectives of the tax system reforms include:
Improved domestic resource mobilisation capabilities given the limited access to concessionary funding. This will be achieved through, among other interventions, broadening the tax base by streamlining tax expenditures, supporting the graduation of informal businesses into tax-paying formal businesses, as well as leveraging the opportunities provided by advancement in information and communication technology (ICT); and
Improving the ease of doing business and consequently the competitiveness of Zimbabwe as an investment destination.
Q: How does the Government intend to address the issue of “too many taxes” and streamline the tax structure?
A: The Government is aware of the concerns raised by taxpayers, particularly corporates, over the multiplicity of taxes levied on business and the effects thereof on cost of goods and services, competitiveness and profitability.
Accordingly, the Government has initiated the process to respond to the concerns of business by undertaking an evaluation exercise on tax regime.
While this process is underway, there is also need to provide some context on the governance structure of the current tax system.
The Central Government is largely responsible for tax policy and administration of taxes such as value-added tax, corporate income tax and customs duties, whereas local authorities are responsible for some business licences and regulatory fees.
Other statutory bodies are responsible for regulatory fees to operate within specific sectors, and these include the Postal and Telecommunications Regulatory Authority (Potraz) and the Environmental Management Agency (EMA).
Given this context and the multiplicity of agencies responsible for both taxes and regulatory fees and levies, there exists an opportunity to streamline such charges in order to remove duplicity and simplify administrative processes.
At the beginning of the year, His Excellency, the President, Dr ED Mnangagwa, made a commitment to improve the ease of doing business by addressing the high regulatory and utility costs and enhancing border efficiency.
The aim is to create a conducive business environment that attracts both domestic and foreign innovation, and promotes sustainable growth.
A regulatory impact assessment has been initiated and consultations have been ongoing, which culminated in the draft report set to be presented to Cabinet for further deliberations.
The objective is to review and streamline business regulations to reduce compliance costs and eliminate bureaucratic inefficiencies.
The Minister of Finance, Economic Development and Investment Promotion will present an update and guidelines for review during the midyear Budget review.
Q: What is the timeline for the implementation of these reforms?
A: While the Government remains desirous to urgently implement some of the reforms, there is need for due process and proper research on the appropriate interventions.
Treasury may, therefore, not be able to provide specific timelines.
Finalisation of the review process should, however, provide a sense of the timelines for implementation of some of the reforms.
Q: What public consultations have been made to gather input from business and citizens?
A: Regarding the tax reform, Treasury always consults relevant stakeholders largely within the context of the mid-term review or the national Budget process.
However, regarding the broader reform agenda targeting streamlining of taxes, we will be guided by the review process, which should assist in identifying the critical stakeholders and the course of action.
Q: What are the key objectives of this reform process in terms of revenue generation and economic growth?
A: As I have already alluded to, the reform agenda seeks to achieve the following primary objectives:
Improve domestic resource mobilisation capabilities given the limited access to concessionary funding; and
Improve the ease of doing business and consequently the competitiveness of Zimbabwe as an investment destination, mindful of the strong correlation between investment and economic growth.
Q: Can you provide details on the specific taxes that are being considered for elimination, consolidation or simplification?
A: At this point, it is difficult to share specifics around the tax reform agenda.
The ongoing review process and consultations with the relevant stakeholders will inform and guide the process.
Q: What role will technology play in simplifying tax administration and reducing compliance burdens?
A: Technology plays a critical role in tax administration.
The recently deployed Zimra Tax and Revenue Administration System (TaRMS), among other interventions that include deployment of drones for border management and the electronic cargo tracking system, has already shown the immense benefits that can accrue from the deployment of technology and also enhancing harmonisation of such systems with other relevant agencies.
It is envisaged that broadening the scope of technology deployment will assist in addressing current challenges related to tax evasion by unregistered businesses and emerging sectors such as e-commerce.
Online Reporter