Zim seeks IMF assistance in tax system

via Zim seeks IMF assistance in tax system – NewsDay Zimbabwe October 12, 2015

Government is seeking technical assistance from the International Monetary Fund (IMF) in coming up with a tax regime that is business friendly.

BY BUSINESS REPORTER

In a letter of intent to IMF managing director, Christine Lagarde, Zimbabwe said it was working on reviewing the tax system.

The letter is dated September 30, 2015 and jointly signed by Finance minister Patrick Chinamasa and Reserve Bank of Zimbabwe (RBZ) governor John Mangudya.

“We also plan to review the design of our tax system with a view to making it more business friendly and to halt the recent slide in tax collection as a percentage of GDP. For this purpose, we intend to request fund technical assistance,” the government wrote.

It said it was taking action to strengthen revenue collection and enforcing tax payments by agreeing with clients on repayment schedules to eliminate their overdue tax obligations.

“We are strengthening revenue administration, in collaboration with our international partners. Moreover, we plan to implement the recommendations of the recently completed Afritac South technical assistance mission focusing on improving risk mitigation techniques in customs. Going forward, we plan to rationalise the tax expenditure regime,” it said.

Zimbabwe is under a 15 months economic supervised reform programme by the IMF. The plan, Staff Monitored Programme (SMP) will end in December. Zimbabwe passed with flying colours in the first and second reviews after meeting the majority of the structural benchmarks.

Government said Cabinet has agreed on the principles of the fiscal regime for the mining sector, which aim at generating additional revenue without undermining investors’ incentives.

“With the support of our international partners, we have started working on the specific proposals for mining taxation. We will seek fund technical assistance to help prepare the mining taxation proposals,” it said.

“We developed a fiscal model for mining sector revenue monitoring and projections and, in collaboration with the mining companies, we are working towards implementing it. The amendments to the Mines and Minerals Act (MMA), together with the new mining fiscal regime, will be submitted to Cabinet once stakeholder consultations have been completed.”