The request for the six-month moratorium was made during a
public meeting on Tuesday with informal traders hosted by the Bulawayo Informal
Sector Working Group (BISWG) to discuss the impact of the Ministry of Finance,
Economic Development, and Investment Promotion’s new measures set in terms of
the Finance (No.2) Act 13 of 2023, which spells out how manufacturers,
wholesalers, retailers, informal traders, and individuals should pay tax.
Last year during the 2024 national budget presentation, the
finance minister, Professor Mthuli Ncube, announced measures to make vast
segments of the informal sector to register for tax purposes, even if the
businesses do not make enough to pay tax.
Under the new measures, manufacturers and wholesalers are
limited in what they can sell to those who are not tax compliant because they
must do business with those who are.
This means that retailers, informal traders, and
individuals who are not registered for Value Added Tax (VAT) will not buy goods
from wholesalers if the price exceeds US$1000 or the equivalent at the auction
rate of exchange.
However, during the public meeting, several informal
traders said they needed more time to familiarise with the tax certification
scheme before they could start paying tax.
“We are requesting
for a six month moratorium because if informal traders have to comply with
taxes, there is technology that they need and it takes time to have it. We are
hoping that the government can give a special exemption moratorium to SMEs and
give them time to comply because the penalties are painful,” said a
participant, Stevenson Dlamini.
Dlamini added that informal traders needed to master the
‘My tax service system’ or the tax certification scheme managed by the Zimbabwe
Revenue Authority (ZIMRA).
“It will be difficult for the traders to understand or
comply with the new regulations. There is a need for a moratorium so that
during that period, SMEs and the informal sector can go through training on how
to comply and learn other legal implications they need to understand,” Dlamini
said.
An informal trader, Solane Ncube also queried how they
could manage to pay formal tax when vendors were self-sustaining since there is
no employment.
“There are no functional traders in Bulawayo, we are now
employing ourselves and from the little we get, we are now supposed to pay tax,
register on time. To be honest, it’s hard for us to pay for everything that is
needed by the government,” said the informal trader.
Ncube predicted that the new tax obligations may not result
in the growth of the informal sector as expected by the finance minister.
Her views were buttressed by another participant, Trust
Mkwananzi, who said the new tax measures would squash the small enterprises
instead of promoting their growth.
“If you are small
and required to pay this and that, automatically you are being set for
failure,” Mkwananzi said.
Mkwananzi added that financial institutions which were
supposed to boost small businesses were not ‘small scale enterprise friendly’
as they do not offer funding.
“SMEs should not be subjected to paying exorbitant fees but
be able to even access licences,” he said.
Another participant, Percy Mcijo blamed the finance
ministry for not holding consultation meetings with the relevant groupings.
“The first thing that was supposed to happen was to have
consultations on the budget. I think this is the only budget that was done
without consultation. Consultations are specified in the constitution because
the budget is supposed to come from the people but this time that process was
by-passed,” Mcijo said.
Mcijo claimed Zimbabwean officials were “good at creating
policies but failed to implement those policies.”
Dumisani Ncube, who is in the Advisory Council of SMEs for
Bulawayo, Matabeleland North and Matabeleland South, concurred there is a need
for informal traders to have more training on the tax certification scheme.
“People don’t understand the Statutory Instruments, the
policies that are there and the benefits of why they should register. They
don’t understand it,” Ncube said.
Ncube said his next role is to be more active in educating
informal traders and doing more advocacy to help SMEs interpret laws that are
there. CITE
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