Small to Medium enterprises now make up about 70 percent of registered taxpayers, contributing about 20 percent to tax revenue, according to the Zimbabwe Revenue Authority.
Zimra acting commissioner general Happias Kuzvinzwa recently said the current contribution by the sector was a reflection that SME’s had become key players in the Zimbabwean economy.
He said SMEs are now a critical cog in the economic value chain, with most of their activities or transactions creating tax incidences.
“SMEs are key economic players in the Zimbabwean context, who play a vital role in the economic growth and development of the country.
“They constitute about 70 percent of the current registered tax payers, with a contribution to tax revenue of about 20 percent. There is, however, still potential to increase the contribution by SMEs to tax revenue,” said Mr Kuzvinzwa.
Zimra is currently on a programme to encourage SMEs to formalise their operations.
“Zimra continues to engage SMEs through seminars, workshops, radio and press adverts, television and the Zimra website. This has seen a considerable number of SMEs formalise their operations.
“Successful taxation systems worldwide are based on voluntary compliance by taxpayers. Non-adherence to tax laws and minimum compliance by SMEs has the potential to negatively impact on the economic enhancement endeavours meant to boost SME growth,” said Mr Kuzvinzwa.
He said Value Added Tax and Pay as You Earn are taxes paid upfront to the taxpayer by consumers and employees respectively, yet taxpayers fail to remit these to Zimra and utilise it for their own purposes.
In a bid to encourage registration for VAT by clients, Mr Kuzvinzwa said a moratorium was provided which will result in penalties and prior tax liabilities being pardoned for qualifying taxpayers.
The moratorium applies to taxpayers who are not registered for VAT, and whose turnover is between $60 000 and $240 000 per annum. The moratorium period for VAT registration is only valid from January 01, 2017 to June 30, 2017.
Mr Kuzvinzwa said presumptive tax is paid by businesses that fail to keep records as required by law and is applied by charging presumed tax based on prescribed amounts.