THE government’s new regulations seeking to protect value chain integrity and transparency have been met with resistance from informal traders, who argue that it will cripple their operations.
According to the new measures announced by the Zimbabwe Revenue Authority (Zimra) last week, manufacturers can now only sell their goods to wholesalers who are registered for value-added tax and have tax clearance certificates following review of the tax system in Finance minister Mthuli Ncube’s 2024 budget.
The wholesalers would, in turn, only sell their goods to licensed and registered retailers while individuals can only buy goods worth not more than US$1 000 or its Zimbabwe dollar equivalent within 30 days.
The measures also target small businesses and individuals running flea markets, tuckshops, street vendors and hawkers among others.
In separate interviews with Standardbusiness, informal sector representatives said the measures were unsustainable.
“This will dent the livelihoods of many informal traders and broadly over five million Zimbabweans surviving on informal trading,” Bulawayo Vendors and Traders Association executive director Michael Ndiweni said.
“The new measures say wholesalers will need to demand a Zimra tax certificate for informal traders to buy goods, this will see an increase of imported goods and also possibly increase smuggling of goods.
“Wholesalers are likely to give informal traders goods through the back door. I do not see them waiting for those with tax certificates when there is a ready informal market.
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“This would mean a clash between the government, wholesalers and informal traders. This appears to be criminalising informality.”
Ndiweni said the introduced measures were silent on the benefits of formalisation.
He said there is also a need to consider reducing the cost of compliance, adding it was not clear whether the registration was for free or not.
“There is a need for the Ministry of Finance to engage with informal trader associations, knee jerk decisions will affect many livelihoods,” Ndiweni said.
“The Ministry of Industry and Trade also needs to urgently engage stakeholders in meetings and find a lasting solution to the likely problems that will arise from the new measures.”
Zimbabwe Informal Traders Council chairman Arthur Muromba said Zimra needs to engage all relevant stakeholders for buy-in.
“Zimra should lead the process,” Muromba said. “Yes, the measures might be painful for now but in the long run they will benefit the economy.
“There is no way people should continue operating in the informal sector forever.
“Zimra needs to incentivise the process. There must be a funding facility to support those that are going to formalise and be tax compliant.”
Small-to-Medium Enterprises Association of Zimbabwe chief executive officer Farai Mutambanengwe said the new measures had brought in confusion in the market.
“The problem being that most of those retailers were not registered with Zimra, so there is now a process of trying to get those registrations done, but in the meantime, business has been negatively impacted,” Mutambanengwe said.
“Then also the change from zero rating to Vat exemption of certain products, it also now creates an additional tax of Vat, because when products are now Vat exempt, it means you cannot claim your input tax.”
He added: “So again, that is resulting in an increase in prices. So overall, I think at the moment, there is a lot of confusion, uncertainty, and instability around the measures.
“I know there are ongoing engagements to try and iron out those issues until people can reach some sort of consensus in terms of what is workable.
“As the measures stand, there are a lot of impediments to the normal course of doing business.
“Right now, it’s quite chaotic, I would almost say. There are some issues that, if not addressed, might then result in our formal manufacturing and retail sector being negatively impacted to the advantage of the informal sector.”
