Banks lobby for tax regime revamp

ZIMBABWE'S banking sector says government must extend tax payment periods to twice a year to give industries breathing space after being affected by pandemic-related headwinds.

Under current policy, companies pay taxes to the Zimbabwe Revenue Authority every quarter.

But in the past 24 months, Zimbabwe has been caught up in the global scourge - the worst health crisis to confront the world in 100 years - with serious implications on consumer spending, which has affected revenues.

The Zimbabwe National Chamber of Commerce recently said that there had been  bloodbath in domestic industries.

In its submission to the Finance ministry spelling out expectations for the 2022 National Budget, the Bankers Association of Zimbabwe (BAZ) said the terrain had shifted and government should take immediate action.

BAZ said its proposal was important given that annual inflation rate plummeted from more than 830% in July last year to about 55% in October.

Companies' problems have been compounded by developments at the foreign currency auction system, where the Reserve Bank of Zimbabwe (RBZ) has been allotting forex to winning bids without the corresponding supply of United States dollars, resulting in backlogs.

"The evolving COVID-19 pandemic situation continues to present sustainability and growth challenges for the industry," BAZ said in its paper.

"It is suggested that the tax quarterly payment dates (QPDs) be reviewed to be biannual given significant reduction in inflation figure to accelerate industry growth and recovery," the bankers' association noted in the paper, which proposed several tax reviews to develop the financial services sector and reduce the cost of borrowing for companies and consumers.

It said government should also consider removing taxes on the importation of digitalisation technologies including automated teller machines and self-service technologies.

"Banks should lobby for the removal or decrease of import tax levied on goods brought into the country for the purposes of digitalising financial services like point-of-sale terminals, self-service tablets, ATMs and self-service booths. This will reduce the cost of importing the equipment and thus reduce the charges that are passed on to the customer. Currently clients are levied a tax on all card-based transactions and a further IMTT tax for amounts above $100. We are lobbying for the removal of one of the taxes. This will encourage clients to utilise their cards. Currently most vendors of digital solutions are based outside the country which results in banks having to use foreign currency in purchasing solutions. The government should incentivise local tertiary institutions and service providers to develop home-grown solutions for use in the financial sector. This may be done in the form of loans for development of these solutions," BAZ said.

It said government should also come up with a debt repayment plan for its unsettled foreign commitments.