Zimbabwe plans to reform its tax and regulatory fee system within six months, aiming to halve certain fees and eliminate others. A cabinet committee will review regulations to reduce bureaucratic barriers, improve the business environment, and increase economic competitiveness, particularly for small and medium enterprises.
Zimbabwe is set to undergo a significant overhaul of its taxation and regulatory fee system within the next six months, focusing on simplification and the reduction of burdens on businesses. Some taxes and fees will be halved or eliminated altogether, aimed at fostering a more conducive environment for business operations and stimulating economic growth. A high-level cabinet committee has been established to analyze and revamp current regulations, reflecting on the concerns voiced by industry leaders regarding excessive financial burdens.
President Emmerson Mnangagwa has directed swift action on eliminating unnecessary regulatory barriers that hinder economic progress. At the recent Cabinet meeting, he emphasized the importance of regulations that facilitate rather than obstruct development. Currently, businesses face complex tariffs and regulatory frameworks that elevate operational costs, contributing to challenges in maintaining viability, particularly for small and medium enterprises.
Finance Minister Professor Mthuli Ncube has outlined plans to undertake a critical review of the tax structure, aspiring to halve the number of taxes and fees. He stated that the government is focused on regulatory fees rather than the number of taxes, with an aim to bring Zimbabwe’s requirements in line with regional norms. This review seeks to streamline processes and reduce burdens, establishing benchmarks against both regional and international standards.
The retail sector has been particularly challenged by Zimbabwe’s complex taxation and licensing system, with overwhelming demands for licenses significantly detracting from business efficiency. Reports from the Confederation of Zimbabwe Retailers reveal that compliance with over 30 different licenses is required for full operational compliance, which imposes excessive financial strains on businesses, especially SMEs.
High compliance costs are exemplified by the various licensing fees associated with operating a supermarket in Harare. For instance, a supermarket must procure numerous licenses, incurring costs exceeding US$15,000 annually when combining rental, salaries, and utilities. The burden of these expenses exacerbates operational difficulties, enabling informal traders who evade such costs to thrive and create an unfair competitive landscape.
The government recognizes the urgent need to adjust regulations to ease the burden on formal businesses while ensuring a level playing field against informal competitors. Comparatively, neighboring countries maintain far less stringent licensing requirements, highlighting the potential for significant improvements within Zimbabwe. President Mnangagwa has reinforced the commitment to making the country more business-friendly, indicating that revisiting regulatory frameworks is critical for fostering sustainable local and foreign investment.
In summary, Zimbabwe’s imminent overhaul of taxes and regulatory fees is intended to ease the financial burden on businesses, streamline licensing processes, and promote economic growth. This initiative addresses the challenges faced by the formal sector, particularly retail, in light of excessive compliance requirements. The government aims to align its regulations with regional standards and enhance the overall business landscape to stimulate competitiveness and investment.
Original Source: www.zawya.com
