TRADE resumed on the Zimbabwe Stock Exchange (ZSE) yesterday after an eight-day shutdown following a stand-off between stockbrokers and the Zimbabwe Revenue Authority (Zimra) over the payment of Value Added Tax (VAT) backdated to 2004.
R>Though some shares changed hands, stockbrokers said investors had adopted a wait-and-see attitude on the stock market until a lasting solution between the fighting parties was reached.
“The situation was not the same. It could take a while before investors have confidence on the (stock) market,” said a broker with a commercial bank.
He said there was no guarantee that trade had resumed permanently as Zimra still insisted on VAT payments backdated to 2004. Stockbrokers have resisted the decision.
They warned that VAT tax payments could lead to a spate of company closures and loss of confidence on the local bourse.
The stalemate started on April 24 when Zimra wrote letters to stockbrokers and Securities companies asking them to supply information on VAT and other taxes paid backdated to January 2004.
“Recent audit work in a number of organisations in your line of business has indicated low compliance,” Zimra said.
“This has led this (investigation) division to carry out a wide audit and study of operations and taxation of stockbrokers,” wrote Zimra in one of the letters.
Zimra requested stockbrokers to supply VAT registration numbers and the amount they are supposed to pay from January 2004 to 30 April 2006.
The Zimbabwe Independent understands that no submissions were made by stockbrokers as per Zimra’s request.
On May 23 ZSE chief executive Emmanuel Munyukwi responded to Zimra advising them that the stock market had appointed Kudenga & Co Chartered Accountants as their tax consultants and that all tax correspondence be forward to them.
A meeting held between stockbrokers and the ZSE on May 24 discussed at length the possibility of Zimra garnishing brokers’ accounts, with brokers expressing fears that their business would not be able to sustain such demands as they would have to close immediately thereafter.
Yesterday Finance minister Herbert Murerwa said brokers had misinterpreted the law and pending the court’s judgement they should comply with Zimra. He said the tax would be charged on the 2% brokereage commission.
This also means investors would be taxed via a three-tier system, stamp duty, withholding tax and VAT.
“Following discussions between Zimra and representatives of the ZSE regarding the impasse that had resulted from the stoppage of trade an agreement has now been reached that stockbrokers resume trading with immediate effect and should pay VAT,” he said.