Business / Companies
Zimra loses tax battle
22 Jun 2014 at 11:57hrs | Views
The Zimbabwe Revenue Authority (Zimra) has lost the battle with the Securities Exchange Commission of Zimbabwe (SECZ) after Treasury said the capital markets regulator was exempt from paying income tax.
In a notice published in the Government Gazette, the minister of Finance and Economic Development declared that SECZ was exempt from paying income tax.
"This notice shall be deemed to have come into effect on the 1st of August 2008," the notice said.
"The consequence of this declaration is that all receipts and accruals of the Securities and Exchange Commission of Zimbabwe are exempt from paying tax."
Zimra and SECZ had differed on the waiver issued by government in 2012 exempting the capital markets regulator from paying income tax.
SECZ argued that it was exempt from paying tax while the tax collector said the notice had no date when it was supposed to start.
Zimra then wanted SECZ to pay income tax from 2008 when it started operating up to 2012.
The latest notice repealed an earlier one made in 2012.
The relief on SECZ comes as the tax collector has been besieging companies looking for their level of compliances and in some instances garnishing bank accounts as the hunt for tax defaulters intensifies. The tax agency is under pressure to collect revenue to meet the country's competing needs.
In the first quarter of the year, Zimra surpassed its target by 2% after collecting US$834,6 million. Its target was US$817,9 million.
In a note to investors, MMC Capital Research said although there was an improvement in revenue collected, the outlook was murky.
MMC said while company tax revenue's contribution to total revenue had improved to 13% in 2014 from 10% last year, it was projecting less contribution in the full year to December 31 "as more companies will likely scale down their operations or ultimately close".
Local companies are struggling to stay afloat, beset by an unavailability of affordable financing to retool. As a result, companies are still stuck with antiquated machinery which has made the cost of production expensive. Consequently, local products have become uncompetitive against cheap imports.
The Confederation of Zimbabwe Industries has already projected that capacity utilisation would fall to 30% from 39,6% recorded last year.
The Zimbabwe Congress of Trade Unions say over 2 000 have lost their jobs from January to date.
In a notice published in the Government Gazette, the minister of Finance and Economic Development declared that SECZ was exempt from paying income tax.
"This notice shall be deemed to have come into effect on the 1st of August 2008," the notice said.
"The consequence of this declaration is that all receipts and accruals of the Securities and Exchange Commission of Zimbabwe are exempt from paying tax."
Zimra and SECZ had differed on the waiver issued by government in 2012 exempting the capital markets regulator from paying income tax.
SECZ argued that it was exempt from paying tax while the tax collector said the notice had no date when it was supposed to start.
Zimra then wanted SECZ to pay income tax from 2008 when it started operating up to 2012.
The relief on SECZ comes as the tax collector has been besieging companies looking for their level of compliances and in some instances garnishing bank accounts as the hunt for tax defaulters intensifies. The tax agency is under pressure to collect revenue to meet the country's competing needs.
In the first quarter of the year, Zimra surpassed its target by 2% after collecting US$834,6 million. Its target was US$817,9 million.
In a note to investors, MMC Capital Research said although there was an improvement in revenue collected, the outlook was murky.
MMC said while company tax revenue's contribution to total revenue had improved to 13% in 2014 from 10% last year, it was projecting less contribution in the full year to December 31 "as more companies will likely scale down their operations or ultimately close".
Local companies are struggling to stay afloat, beset by an unavailability of affordable financing to retool. As a result, companies are still stuck with antiquated machinery which has made the cost of production expensive. Consequently, local products have become uncompetitive against cheap imports.
The Confederation of Zimbabwe Industries has already projected that capacity utilisation would fall to 30% from 39,6% recorded last year.
The Zimbabwe Congress of Trade Unions say over 2 000 have lost their jobs from January to date.
Source - thestandard
