Business simplification: CZR, ZIMRA New Collaboration

The Confederation of Zimbabwe Retailers (CZR) and the Zimbabwe Revenue Authority (ZIMRA) have launched a joint initiative aimed at simplifying business processes and promoting fair taxation, in a move expected to drive economic growth and improve compliance.

This collaborative effort seeks to streamline tax obligations, reduce administrative burdens, and create a more business-friendly environment.

Speaking during the CZR-ZIMRA Stakeholder Engagement Meeting, CZR President Dr. Denford Mutashu urged ZIMRA to urgently review current tax systems to improve the ease of doing business in the retail and wholesale sectors. He highlighted the importance of improving tax compliance within the informal sector.

“Many informal traders operate outside the tax net and are not subject to VAT or other obligations. This makes their products appear cheaper than those from compliant formal businesses, distorting fair competition,” said Dr. Mutashu.

He proposed that ZIMRA remove the current 5% withholding tax on sales made to non-tax-compliant customers and called for a simplified tiered presumptive tax system to encourage voluntary compliance among informal traders.

Dr. Mutashu also recommended that Taxpayer Identification Numbers (TINs) be made mandatory when applying for shop, trading, and liquor licenses to enhance tracking and enforcement.

During the engagement, he posed a question to ZIMRA Acting Commissioner for Domestic Taxes, Mrs. Mupanduki, regarding the proportion of revenue currently collected from the informal versus formal sectors. He also raised concerns about Route-to-Market (RTM) restrictions.

“Current RTM policies require even small walk-in customers to present VAT registration and tax clearance certificates to purchase goods at wholesale prices. This hinders competitiveness and discourages bulk buying,” he said.

CZR called on ZIMRA to review and relax RTM requirements to enhance market access and support formal wholesalers.

Concerns Over IMTT, Delayed Refunds, and VAT on Overheads
CZR raised further concerns over the Intermediated Money Transfer Tax (IMTT), noting that it disproportionately affects formal businesses that rely on electronic payments, while the largely cash-based informal sector escapes the tax.

They proposed:

• Reducing the IMTT rate to 1% for US$1 transactions
• Waiving the IMTT entirely for ZIG transactions

Dr. Mutashu also inquired about when the IMTT would be reviewed or removed, citing its adverse effects on formal retailers.

He further expressed concern over delayed tax refunds, particularly VAT refunds, which are often held up for over a year, impacting liquidity.

“ZIMRA charges interest on late tax payments, yet there is no compensation when the tax authority delays refunds,” he noted.

CZR recommended that ZIMRA:

• Establish clear turnaround timelines for tax refunds
• Apply interest on overdue refunds owed to taxpayers

On the issue of VAT on overheads, CZR pointed out that businesses selling VAT-exempt basic commodities cannot reclaim input VAT, increasing operational costs and threatening viability for low-margin retailers.

The organisation called for a review of VAT policies, particularly on reclaiming VAT on overheads for retailers of basic goods.

Dr. Mutashu also highlighted flaws in the PAYE system, citing discrepancies between calculations on ZIMRA’s TARMS platform and company payroll systems. He noted that employees with incorrect or unregistered national IDs could not be processed in TARMS.

“There’s no option to use a generic employee number when submitting VAT on such employees,” he said, recommending interim solutions like generic codes and better system alignment.

Rising property tax was also flagged, with landlords transferring increased tax costs to tenants, adding to the financial strain on retailers.

ZIMRA also raised its own concerns about the treatment of goods at ports of entry, especially regarding inspections.

“Trucks headed to their final destinations are being intercepted and redirected to Bak Storage, despite prior checks at the border,” said a ZIMRA representative.
“This causes delays and results in additional costs for storage, labor, and handling. Some shipments are also being damaged during re-inspection.”

In response to the issues raised, ZIMRA reaffirmed its commitment to improving the ease of doing business and expressed support for the tiered presumptive tax model.

The authority encouraged the increased use of plastic money for tax administration purposes and acknowledged resource constraints in fully integrating the informal sector into the tax system. It was noted that informal sector taxes are now collected during license renewals.

Commissioner Mrs. Mupanduki concluded by reiterating ZIMRA’s stance on transparency and reform, adding that the fight against corruption remains a top priority for the authority.