mbulelo smpofu
Sikhulekelani Moyo, mskhulekeani16@gmail.com
THE business community has renewed its call for Government intervention to lower the cost of doing business, citing compliance costs as a significant barrier that drives informalisation.
Speaking during a recent post-budget meeting in Bulawayo, Confederation of Zimbabwe Industries (CZI) Matabeleland Chamber president, Mr Stephen Ncube, emphasised the need for incentives to encourage formalisation.
He warned that without such measures, businesses would continue to exploit loopholes to evade compliance, further straining the formal economy. Mr Ncube said informal businesses are challenging to tax effectively.
“Presumptive tax reforms have been largely unsuccessful, with collections contributing less than 0,2 percent of total tax revenue since 2019. The shift in the tax base away from corporate tax highlights the unprofitability of the current operating environment for businesses,” he said.
Mr Ncube noted that corporate tax contributions to total tax revenue had declined sharply from 20 percent in 2021 to 9 percent in 2024.
Similarly, the intermediated money transfer tax (IMTT) dropped from nearly 10 percent in 2021 to 4 percent in 2024, even as value-added tax (VAT) on domestic goods continued to rise.
“This is happening when value-added tax (VAT) on domestic goods has been constantly increasing, undermining the growing economy,” said Mr Ncube.
He said this trend undermines economic growth. Mr Ncube said the declining profitability of businesses, coupled with high compliance costs, increased informality, and competition from imports, is eroding market share and discouraging investment.
To address these challenges, Mr Ncube called for a reduction in the cost of compliance, which he described as one of the most effective ways to expand the tax base and curb informalisation.
He warned that introducing new taxes would only exacerbate the burden on existing businesses, with limited success in boosting revenue collections.
“The recently gazetted Finance Bill has increased the fast food tax from 0,5 percent to 1 percent. While this may seem small, it is significant and could contribute to inflationary pressures,” said Mr Ncube.
“Reducing compliance costs is key to ensuring businesses thrive, contribute to tax revenue, and help build a sustainable economy,” he added.
Mr Ncube welcomed some measures outlined in the 2025 National Budget, such as mandatory registration for corporate and personal income tax on selected products and services, automatic VAT registration for tenders exceeding US$25 000, and efforts to combat smuggling.
He described these initiatives as positive steps toward broadening the tax base and fostering economic growth. —@SikhulekelaniM1
Langa Ma
daniel chigunwe
