THE Zimbabwe National Chamber of Commerce (ZNCC) has cried foul over the double blow exerted by the 2% IMTT on the already overtaxed formal businesses.
In a detailed submission ahead of the make-or-break budget statement expected this month, the business lobby group said despite being introduced in the spirit of bringing the informal market into the taxation bracket, the tax measure has exerted a double punch on formally operating companies.
“Businesses are incurring the IMTT even when paying tax dues to ZIMRA, thus it is a tax on tax. To cushion the supply chain players against the increased cost of production, the cost is passed on to the consumer in the form of price increases across all goods.
“It cannot be emphasized how the intermediate transaction tax has a compounded effect on the supply chain due to the incremental tax charged from the producer to the consumer as shown below,” the grouping said.
ZNCC also raised concerns over how the VAT payments are collected often ignoring the fact that the government being the biggest consumer in the economy often takes much longer to make payments although tax authorities demand payment just within 30 days.
“Our expectations ahead of the budget announcement is that VAT payments should be made on the actual cash received by the business and not on an invoice basis.
“Also, the VAT burden should not be on businesses except to collect the VAT on behalf of the Government. Turnover tax is being used as an avenue in other countries and it can be used also as an option by ZIMRA,” said ZNCC.
The grouping also hailed the government’s position on local currency usage but quickly warned of the urgent need to rein in some government departments which continue to insist on US$ payments. – NewZim
