2% tax regime impacts negatively on companies

Source: 2% tax regime impacts negatively on companies – The Zimbabwe Independent November 16, 2018

COMPANIES have raised concern with fiscal and monetary authorities over the impact of the 2% tax on electronic transfers on their operations.

By Kudzai Kuwaza

Finance minister Mthuli Ncube introduced a 2% tax on electronic transfers on October 1 this year in a bid to reduce the fiscal deficit. The tax, which has caused widespread outrage, with the Confederation of Zimbabwe Industries attacking government for what it described as an ambush.

In various letters to government, companies complained the 2% tax has reduced their competitiveness because of the cumulative impact of the tax as a result of their numerous electronic transactions they conduct.

Some of the companies have even pointed out that they are considering stopping production as it is no longer making financial sense to continue operating.

At a meeting held by the Institute of People Management of Zimbabwe (IPMZ) and the Employers’ Confederation of Zimbabwe (Emcoz) last month, Emcoz first vice-president Israel Murefu pointed out that the 2% tax introduced by Ncube on electronic transfers is further punishment on businesses, which are already paying a number of other taxes including corporate tax.

Emcoz second vice-president Demos Mbauya added that the 2% tax has increased the cost of business.

The tourism sector has also added its voice to the chorus against the 2% tax with Tourism Business Council of Zimbabwe CE Paul Matamisa, in an interview last month, saying the tax flies in the face of government’s mantra that “Zimbabwe is open for business”.

“It is going to affect the business mantra which government is driving that the country is open for business and people who wanted to come from outside the country will wait and see what impact this is going to have,” Matamisa pointed out.

“Trade unions are agitating for demonstrations against the tax and this does not augur well for business. The situation is bleak and dismal and does not look promising. We have got a real challenge on our hands.”