Call for simplification of tax system

CLOUDINE MATOLA

Micro, Small and Medium Enterprises (MSMEs) have urged the government to create a simplified tax regime to make it easy for them to comply with the law, Business Times can report.

According to the most recent Micro, Small and Medium Enterprises Survey report, there are 3.4 m MSMEs operating in Zimbabwe, yet, the majority of them fail to file their taxes.

At the recent MSME meeting in the nation’s capital, Harare, Daniel Chinyemba, the president of the Zimbabwe Chamber of Small and Medium Enterprises, stated that the government ought to implement policies that cater to all small businesses.

“From the Chamber of SMEs, we recommended that at least there must be a difference between the informal traders, the small enterprises, the medium enterprises and large corporations.

“For small enterprises, there is a need for a system that can work in the environment,” he said.

Additionally, Chinyemba stated that the policies in place are inappropriate for the environment of SMEs.

“We realise that ZIMRA has to collect tax  and there is nothing wrong with that and MSMEs must be compliant. But the system that they are using, they are importing some systems that are not going to be suitable for our environment,

“So rather than bringing in a system and just implementing it holistically to a vendor, whatever, tuckshop owner at the same time, hotel or a large corporation, that’s where we have reservations,” he said.

Federation of Micro Businesses in Zimbabwe vice chairperson Agnes Magunje weighed in saying the taxation system promotes many people to venture into the informal sector and it also forces them not to comply hence it will be impossible to attain a middle income economy by 2030.

“If we want to create the middle income economy by 2030, we can’t do it by this taxation method because it actually forces more people to come to the informal sector because of the stringent taxes that are put and it also forces the informal sector not to even comply more because it’s just a complicated tech system,” she said

According to Magunje, the system causes a significant gap in progress and disturbs business in general.

Additionally, Magunje claimed that because the tax system is inherently uninclusive, more individuals will be forced into poverty as a result of the higher taxation regime.

Furthermore, she stated that it is preferable for the government to acquire modest sums of money from a large number of individuals as opposed to placing large tax rates  and receiving it from a select few.

Speaking at the same event, Mavis Sibanda, the permanent secretary for women’s affairs, community development, and small and medium enterprise development, stated that MSMEs are essential to achieving vision 2030 and to the nation’s GDP.

“The MSMEs occupy a strategic position in the achievement of Vision 2030 as such the capacitation of this sector is very critical to achieve Vision aspirations,

“Recent statistics as highlighted in the 2021 MSME survey and 2022 Finscope survey show phenomenal growth of the sector with contribution of more than US$8.6bn to the gross domestic product, “ she said.