Kudzanai Sharara Assistant Business Editor
Government will extend amnesty measures on outstanding taxes that were accrued prior to December 1, 2017, Finance and Economic Development Minister Patrick Chinamasa has said.
Presenting his 2018 National Budget in Parliament yesterday, Minister Chinamasa proposed an amnesty for interest and penalties on outstanding taxes accrued prior to December 1, 2017 for taxpayers who come forward and settle their obligations within the period ending June 30, 2018.
He said the amnesty comes as Government recognises that the economic challenges experienced over the past decade have resulted in a number of companies failing to meet their tax obligations. Government will also consider a moratorium on tax arrears owed by companies that benefited from debt assumption by the Zimbabwe Asset Management Corporation as turnaround efforts by some of the companies were affected by the adverse macroeconomic environment, exacerbated by significantly high tax arrears to ZIMRA.
“In support of initiatives to restructure the balance sheets of these companies, Government will consider, where warranted, a moratorium on tax arrears owed by companies that benefited from debt assumption by the Zimbabwe Asset Management Corporation,” said Minister Chinamasa.
Government, through the Reserve Bank of Zimbabwe, created the Zimbabwe Asset Management Corporation as a special purpose vehicle to house banking sector non-performing loans.
Minister Chinamasa also proposed to ease the tax burden on tobacco farmers by exempting them from the requirement to withhold a 10 percent tax on sales at the Tobacco Auction Floors after farmers had accumulated significant tax arrears.
“Whereas a significant number of taxpayers have been complying with the requirement to withhold tax from non-compliant businesses, this has not been the case with Tobacco Auction Floors on sales by farmers.
“In order to ease the tax burden on tobacco farmers that are experiencing viability challenges, the 2018 Budget proposes to exempt registered buyers of tobacco from the requirement to withhold the 10 percent tax with effect from 1 January 2018.”
“Whereas the withholding tax has assisted in minimising loss of revenue, it has, however, resulted in cashflow challenges for some companies that would be required to claim from ZIMRA refunds that are not timeously processed. In order to minimise cashflow challenges on VAT registered operators, the 2018 Budget proposes to review the VAT withholding rate from 10 percent to five percent of the value of taxable supplies, with effect from January 1, 2018,” he said.
Changes were also made to duty on commercial tyres as the tyre manufacturing industry continues to experience viability challenges.
“In the absence of a local producer, commercial vehicle operators are importing tyres at a relatively high cost, hence are in some instances deferring the replacement of worn tyres, risking the lives of road users. It is, therefore, proposed to ring-fence importation of 100 000 tyres at a lower duty rate of 15 percent for the first quarter of 2018.”