mbulelo smpofu
Sikhulekelani Moyo, mskhulekelani16@gmail.com
FINANCE Economic Development and Investment Promotion Minister, Professor Mthuli Ncube, has acknowledged that the regulatory costs for formal businesses are too high and hinted that the Government will work on modalities to reduce the cost of doing business.
He said this in Bulawayo yesterday where he headlined the Confederation of Zimbabwe Industries (CZI) Matabeleland Chapter Post-Budget Breakfast meeting.
The meeting was meant to give the Bulawayo business community an engagement platform for a post-mortem of the 2025 National Budget presented last month.
During the meeting, tax experts, economists and industry players presented their findings from the National Budget.
A majority of them said the Government has introduced more revenue collection measures, which is affecting compliance for businesses, resulting in growing informalisation and non-compliance.
In his keynote address, Prof Ncube said they have to consider the regulatory regime to promote growth in different sectors.
“From the presentation by the CZI Matabeleland president Mr Ncube that the regulatory costs are too high, I agree with him. I think this is the area that we need to work on as a Government to reduce the cost of doing business,” said Prof Ncube.
“So, clearly we have to reconsider this issue.”
In the 2025 National Budget, the Treasury proposed several tax reforms to bring the informal sector into the national taxation bracket.
Prof Ncube said the informal sector is formal to local authorities and informal to the Zimbabwe Revenue Authority (Zimra) and National Social Security Authority as they fail to register and comply.
Therefore, the minister said there is a need for collaboration between Zimra and local authorities to collect tax from the informal sector.
CZI’s Mr Ncube said incentives for informalisation remain in place.
He said the current tax statistics show that once businesses have gone informal, it’s difficult to collect from them.
Mr Ncube said presumptive tax reforms have not been successful as collection remained at 0,2 percent of the total tax revenue taxed since 2019.
“We are concerned about the shift in the tax base, away from the corporate tax and contribution to tax revenue, which shows that the current operation environment is not very profitable for businesses,” said Mr Ncube.
“Corporate tax contribution in total tax revenue has decreased from about 20 percent in 2021 to only nine percent in 2024.”
Mr Ncube said the high cost of compliance is eroding profits and high informality is eroding market shares. He said the proposed new taxes in the 2025 National Budget worsened the burden.
He said the recent Finance Bill shows that the fast-food tax, which was around 0,5 percent has been increased to one percent. — @SikhulekelaniM1
