Chinamasa defends presumptive tax

via Chinamasa defends presumptive tax – DailyNews Live 28 May 2015

HARARE – Finance minister Patrick Chinamasa says Zimbabwe’s presumptive tax was in line with international trends and blamed small-to-medium enterprises (SMEs) for evading taxes.

“The issue of presumptive tax has been operative for quite a while now. The issue which may arise is whether the level is too high or too low,” Chinamasa told Parliament last week.

“I think it’s something that could be looked into. I do not believe that the presumptive tax, as currently charged, is too high. The taxpayer has a choice. You can make your books available to show that you are not making money,” Chinamasa said.

Zimbabwe introduced presumptive tax in 2005 but the policy was further enforced in 2011 to broaden Treasury’s revenue base in view of the increasing informal business activities.

Presumptive tax mainly targets small-scale traders including crossborder traders, furniture-making traders, transport operators, small-scale miners, restaurant operators, flea market and hair salon operators, among others.

Chinamasa noted that some Zimbabweans were “not liable to pay tax, but if you are not prepared to be transparent to show your books to the taxman, the taxman has a right to presume you to be making an income which you may not be making”

This comes as Zimra Commissioner-General, Gershem Pasi, recently widened the tax net in a desperate bid to rake in more revenue required to fund government’s tottering operations leading to the taxing of struggling vendors across the country.

The tax collection agency is currently in talks with the ministry of Local Government to find ways of organising vendors into designated areas so that they could start contributing to the fiscus, which has been overwhelmed by competing demands for cash.

Apart from this, the authority has adopted drastic measures to sustain government operations including raiding bank accounts belonging to companies through garnishee orders.

Zimra recently extended the tax amnesty window for companies to the end of June this year, hoping that more businesses would declare their tax liabilities

At the moment, tuck-shops are reportedly being asked to pay presumptive tax, which essentially means they are supposed to be paying $300 after every three months.

“We cannot afford not to follow where the money now is, which is in the informal sector. What I would say to the hon. members is that if they are already making income, all we want to know is what level of income,” Chinamasa told the National Assembly.

He also said if informal sector players were forthcoming with their books if they were not making any profit government would not tax them.

“The tax system has got tax bands and there are thresholds of income which are not liable to taxation. Like I said, you can do your books very simply, very elementary and show the taxman,” Chinamasa said.