Zvamaida Murwira
Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube, has acceded to a call by legislators for the reduction of presumptive tax on barber shops and hair salons but has extended the tax bracket for the informal sector to include beauty parlours, fitness centres and butchery operators.
This comes as Prof Ncube said the fuel industry will continue to be allowed to sell in foreign currency to allow it to replenish its products given the shortage of hard currency on the market.
Prof Ncube said this last Friday in the National Assembly during debate on the Finance Amendment Bill which seeks to give legal effect to the various fiscal measures he announced during the mid-term fiscal policy review in July.
Legislators from the political divide were unanimous that the proposed revised monthly US$30 per chair was too high for hair salons and barber shops and proposed that it be reduced to around US$10, after an initial proposal of US$300.
They argued that if the tax became too high there would be no compliance as barbers and hair salons would advertise digitally and visit clients at their homes as was the case during the Covid-19 induced lockdowns.
But Prof Ncube said his experience had shown that many people were spending money on hair-dos.
“Some are small, so it is possible that $30 may be too high, but then we would have to go deeper to really try to differentiate according to size. It gets very complex. So, being a presumptive tax, we just came up with a figure that we thought on average would be affordable but there is no reason why these cannot be reviewed in future,” he said.
Buhera West Member of Parliament, Cde Tafadzwa Mugwadi (Zanu PF), argued that it was not prudent to impose taxes which legislators could not afford given their meagre salaries.
“I am doing a comparative analysis, which means those who run salons get more than what Members of Parliament get.
Prof Ncube said his objective was to reduce presumptive tax for several businesses to ensure compliance but added other businesses into the tax bracket.
“In order to provide relief to taxpayers, thereby enhancing tax compliance, Government made necessary adjustments to presumptive tax. These Clauses 6, 10 and 12 seek to revise downwards the presumptive taxes and broaden the tax base to include beauty parlours, fitness centres and butchery operators,” he said.
Prof Ncube said in future, Treasury will consider whether to put additional businesses in the presumptive tax bracket.
“Furthermore, on the issue of presumptive tax payment and non-compliance, I wish to advise the House that the Zimbabwe Revenue Authority is seized with the matter and trying to make sure that there is better compliance in terms of payment of these presumptive taxes.”
Commenting on the call by Members of Parliament to direct service stations to sell fuel in ZiG, Prof Ncube said for now it was difficult to do so given the foreign exchange situation in the market.
“This is a good suggestion. Because of the shortage of foreign currency, in terms of its availability in the system for availing foreign currency, the inter-bank system, we will not be able to provide enough foreign currency for the sector hence we said you can sell in United States dollars and harness the foreign currency that you need for re-imports or imports from the market,” he said.
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