THE depreciation of the Zimbabwe dollar has made business planning difficult and seen a number of exporting companies being taxed on exchange gains that make it difficult to plan, Zimbabwe Revenue Authority (Zimra) has said.
“In a volatile environment like we are going through, it becomes very necessary to always ensure that the monetary and fiscal policies are aligned,” Zimra commissioner general Faith Mazani said at the second edition of the Financial Gazette Annual Tax Review Breakfast meeting on Thursday.
The most notable policy changes have been the movement from multi-currency to ZWL through S.I 142 and the reporting currency for tax purposes is now ZWL according to S.I. 33.
“The depreciation of the Zimbabwe dollar has made business planning difficult and seen a number of exporting companies being taxed on exchange gains that make it difficult to plan. As the exchange rate fluctuates tax allowances are eroded, and this particularly affects capital allowances bought when the exchange rate was at 1:1,” Mazani said.
The tax collector encouraged voluntary compliance adding that with more taxpayer education, Zimra was working around the clock to ensure there is a better understanding of the importance of paying taxes.
Mazani also encouraged registration of informal sector players.
“In line with our current strategic plan for 2019 to 2023, we are working on simplifying our processes through automation, which will enable us to tap into the wide range of technologies available and widely used by the majority of economic players, including mobile platforms,” she said.
Mazani said as some some sectors like the tourism and the mining sectors continuing to operate in foreign currency, doing tax returns and also processing these returns in dual or multicurrency has presented challenges for both taxpayers and the Authority.
This has particularly been difficult as it requires systems to be changed, she said.
“Taxpayers need to know that the law still requires those conducting business in foreign currency to report in their tax affairs in foreign currency, even if they are doing it illegally.
ZIMRA has the responsibility of enforcing existing laws that require payment of tax in forex where sales of goods and properties liable to capital gains tax are also in forex.
Turning to the informal sector, Mazani said taxing the informal sector remains a challenge and has presented numerous hurdles for the tax authority in conducting its mandate of domestic resource mobilisation.
“Pursuant to equity as one of the tenets of a good tax system, the tax burden should be borne by all engaged in economic activity – whether formal or informal,” she said.
“If that burden is shared equitably in relative terms more resources are made available for economic development. As we address this issue I would like to explain that Zimbabwe has a broad tax mix in the form of income tax covering corporate and employment (PAYE) income Tax , consumption taxes including value added tax and excise duties.”
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