Zimbabwe is revising its tax and regulatory systems to reduce costs for businesses, aiming for a 50% reduction in associated fees over six months. A newly formed committee will assess current regulations to promote economic growth and competitiveness. President Mnangagwa has emphasized the need for a simplified regulatory framework to alleviate burdens on businesses, particularly impacting the retail sector struggling with compliance costs.
Zimbabwe is set to undergo a significant overhaul of its taxation and regulatory fees system, aiming to reduce the associated costs for businesses. The Cabinet has established a high-level committee tasked with reviewing existing regulations and fees over the next six months, with the goal of cutting these fees by 50 percent across all sectors. This initiative is designed to alleviate financial pressures on businesses and to enhance competitiveness in the economy.
President Mnangagwa has emphasized the necessity of simplifying regulations to foster economic growth. During a recent Cabinet meeting, he directed that taxes, licenses, and permits should aid development rather than impede it. Currently, businesses face a complex regulatory environment characterized by high tariffs and numerous compliance requirements that elevate operational costs, thus threatening their viability.
Finance Minister Professor Mthuli Ncube announced plans to halve the number of taxes within six months, stating, “The idea is to see which of these taxes and which of these regulatory fees ought to be reduced or scrapped.” A government committee will analyze these matters and recommend necessary changes. Ncube indicated that while taxes are essential for government revenue, the pressing issue lies with regulatory fees.
The retail sector has been notably impacted by the intricate tax system, according to the Confederation of Zimbabwe Retailers (CZR). Their report revealed that the excessive number of licenses burdens businesses, especially small and medium enterprises (SMEs). A fully compliant supermarket in Zimbabwe may require over 30 different licenses and permits from various authorities, thereby increasing costs and discouraging investment.
For instance, obtaining specific licenses involves substantial fees: a bakery license costs US$703, while a butchery license comes to US$649. Coupled with additional mandates such as environmental regulations, compliance costs soar, particularly for SMEs. These burdens create a challenging operating environment, leading many formal retailers to struggle in contrast to informal traders who avoid such regulations.
Informal traders benefit from the inability of formal businesses to compete on price due to these compliance costs, alongside the challenge posed by rampant smuggling from neighboring countries. CZR President Mr. Denford Mutashu highlighted that besides licensing fees, high rents and utility costs aggravate this scenario, making it increasingly difficult for small businesses to thrive.
President Mnangagwa reiterated the administration’s commitment to simplifying the business landscape, stating, “To enhance the overall performance of our economy, the ease of doing business agenda continues to be an important aspect of our programming.” In comparison to regional standards, Zimbabwe’s requirements are excessive; countries like South Africa and Rwanda have considerably fewer licenses needed for businesses to operate legally.
In conclusion, Zimbabwe’s government aims to reform its tax and regulatory systems to benefit businesses by reducing costs and easing administrative burdens. With the establishment of a high-level committee, there is an expectation of progress towards halving the number of taxes and lessening regulatory complexities. This initiative is targeted at improving the business environment, stimulating growth, and fostering competitiveness, particularly in crucial sectors such as retail where high compliance costs currently hinder operations.
Original Source: www.zawya.com
