Stung by poor revenue streams, the Zimbabwe Revenue Authority (Zimra) has begun engaging small to medium enterprises (SMEs) to be registered for value-added tax (VAT) in a bid to bolster dwindling government revenues.
Zimbabwe’s economy is underperforming due to a myriad of problems besetting the country such as lack of liquidity, shortage of US dollars, reliance on imports and low industry capacity utilisation.
Revenue inflows to the government coffers have been elusive owing to poor policies, making it difficult for government to meet its financial obligations to its workforce.
Zimra is now engaging SMEs to register for VAT, a move earmarked to bolster revenue collections.
“Yesterday (last Wednesday) we had an inaugural apex workshop with about 70 members from the SMEs ministry and associations encouraging them to take advantage of the moratorium to register for VAT with Zimra,” Zimra head of technical service for domestic taxes Charles Jaure told an Institute of Chartered Accountants of Zimbabwe tax seminar last Thursday. “In terms of the moratorium given by the Minister of Finance in the budget we will forgive them. Please, if you have clients tell them to come on board. If they miss the bus, we will all know they missed it.”
With most SMEs reluctant to register for VAT, due to the massive backdated taxes and penalties that they are likely to incur upon registration, Finance minister Patrick Chinamasa in the 2017 budget statement proposed to waive the requirement to account for output tax from the deemed date of qualification for registration.
Chinamasa gave the six-month moratorium on VAT registration for SMEs that qualify on account of their gross turnover exceeding the threshold of US$60 000 per annum.
This incentive will apply to SMEs whose turnover does not exceed US$240 000 per annum and also voluntarily register for VAT with Zimra.
A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of general consumption tax that is collected incrementally, based on the value added at each stage of production and is usually implemented as a destination-based tax.
Furthermore, Chinamasa proposed that SMEs which voluntarily register with Zimra will only account for provisional tax during the first year of registration, when the fourth quarterly payment date falls due.
BDO audit firm tax director Maxwell Ngorima also said the registration for VAT by SMEs is a commendable move, considering that the few taxing paying entities were bearing the brunt of the tax burden.
He revealed that taxpayers were having a nightmare when acquiring tax-clearance certificates due to loopholes in fiscalisation procedures.