Zimbabweans not highly taxed - Zimra

The Zimbabwe Revenue Authority (Zimra) says Zimbabweans are not highly taxed as claimed by some sections of society.

Most of these taxes compare favourably with the rest of Sub-Saharan countries, Zimra Commissioner General Ms Faith Mazani, said this last week while fielding questions after unpacking the Authority's five-year strategy (2019-2023).

Ms Mazani said Zimbabwe has a lower corporate tax rate of 25 percent while South Africa and Swaziland charge 27 percent. Similarly, at 15 percent Value Added Tax (VAT), Harare is at par with South Africa.

"If we look at the effective tax rates, Zimbabwe is not taxed any higher than any other country," said Ms Mazani.

"I will give you an example of corporate tax. I remember when I was in Swaziland; we reduced the company tax from 28 percent to be like South Africa on 27 percent.

"So South Africa and Swaziland are on 27 percent and we are on 25 percent corporate tax, and that's lower. It actually compares favourably with Sub-Saharan Africa countries as well. So it's not true that Zimbabweans are taxed higher."

A report compiled by PricewaterhouseCoopers (Pwc), the corporate income tax rate applicable for both resident and non-resident companies for tax years ending April 1, 2018 and March 31, 2019 is a flat 28 percent.

South Africa also imposes a 20 percent tax on dividends declared and paid by all resident companies as well as by non-resident companies in respect of shares listed on the Johannesburg Stock Exchange (JSE).

In Zimbabwe, the rate of tax on dividends declared by a Zimbabwean company to a non-resident holding company will be subject to non-resident shareholders and is 15 percent while dividends from companies listed on the Zimbabwe Stock Exchange have a rate of 10 percent.

Ms Mazani said Zimbabwe also does not reflect the highest rate on VAT. "Our VAT is not the highest rate. Yes South Africa was at 14 percent together with all the SACU countries (Southern African Customs Union) but South Africa went to 15 percent which is where we are. "So comparatively, we are not the highest taxed people. The only difference is that our taxes are paid by a few because a lot of people are not compliant," said Ms Mazani.

SACU is a customs union among five countries of Southern Africa — Botswana, Lesotho, Namibia, South Africa and Swaziland.

Statistics show that SADC countries such as Zambia have VAT rates of 16 percent; Seychelles (15 percent); Tanzania (18 percent); Mozambique (17 percent); Malawi (16,5 percent); and Madagascar (20 percent). Angola and Botswana have the lowest VAT rates of 10 percent each.

Ms Mazani said only individuals in employment are the ones that could potentially claim to be paying more than their regional counterparts.

"Where we  possibly agree is with individuals that are in employment. Because of the highest rate of tax being 50 percent, it means that those who are above that threshold are paying their last dollar at a high rate but remember with individuals, we have a tax free bracket and the rates graduate, so you have to look at the effective rate not the final rate," said Ms Mazani.

In the 2019 Budget, Finance and Economic Development Minister Professor Mthuli Ncube proposed to review the tax-free threshold from the current $300 to $350.

Prof Ncube further widened the tax bands from $351 to $20 000, above which income is taxed at the highest marginal tax rate of 45 percent, from 50 percent.

The move was designed to attract and retain skilled human capital and also cushion low income taxpayers against rising prices of basic goods. Ms Mazani said in Zimbabwe, the problem was that a few people are paying tax with the rest avoiding the tax-man through various means.

"What you find most unfortunate is that because of non-compliance or low compliance levels, our taxes are being paid by a few that are compliant and it is important that everybody pays their fair share. "That will see Government moderating tax rates or even lower them from where they are now," said Ms Mazani.