Tax experts applaud Government plans to streamline taxes and reduce compliance costs

TAX experts have applauded the Government’s plans to streamline taxes and reduce the cost of regulatory compliance, emphasising the need to review various taxes—including the Intermediary Money Transfer Tax (IMTT)—which they say affects business viability.

This follows the Government’s announcement of significant changes to taxes and regulatory fees for businesses, aimed at improving the ease of doing business and making the country more investor-friendly.

Under the new measures, some taxes and fees will be reduced, while others will be scrapped entirely. The overhaul is intended to simplify the licensing system and cut bureaucratic red tape, making it easier for businesses to operate and grow.

In response to questions from ZimPapers Business Hub, tax expert Dr Peter Mgodi highlighted IMTT as the most contentious tax.

“IMTT is a cost incurred when purchasing goods, yet it is not deductible as a cost of sale. It is then taxed again as part of taxable income,” said Dr. Mgodi.

“This amounts to double taxation, as it effectively becomes a tax on tax.”Dr. Mgodi also called for an increase in the non-taxable salary threshold, stating that the current level is too low.

“The non-taxable salary should be aligned with the poverty datum line. Additionally, the non-taxable bonus threshold is insufficient—it should be raised to at least US$1,000,” he said.

The proposed tax reductions are expected to ease financial pressures on businesses, enhance competitiveness, and stimulate economic growth.

Currently, the formal business environment is characterised by high tariffs and a complex regulatory framework, requiring businesses to comply with multiple tax and permit obligations across various agencies.

This complexity has driven up operational costs, threatening the viability of some enterprises. A recent report by the Confederation of Zimbabwe Retailers (CZR), submitted to the Parliamentary Portfolio Committee on Budget, Finance, and Investment Promotion, found that excessive licensing requirements have severely hindered business operations, particularly for small and medium enterprises (SMEs).

“The cost and ease of doing business remain major concerns for the retail and wholesale sector, with excessive regulatory demands and licensing fees imposing heavy financial and administrative burdens,” the CZR stated.

“Currently, for a supermarket to be fully compliant, it must obtain and maintain over 30 different licences and permits from various authorities.

These include health and safety permits, trading licences, environmental certifications, fire safety clearances, and numerous sector-specific approvals.”

“The sheer volume of these requirements not only inflates operational costs but also deters investment and expansion, particularly for SMEs struggling with compliance expenses.”

According to the report, a retail supermarket in Harare must secure multiple licences from the City of Harare, including a bakery licence that costs US$703 annually, a butchery licence at US$649 and a food purveyor permit at US$649.

A food takeaway licence for the supermarket costs an additional US$649, while a bottle store permit requires US$504.

The city also mandates a financial services licence at US$564, a health report at US$575 and a shop licence at US$564. Beyond municipal fees, businesses must comply with national regulatory requirements.-chroncile