Desperate to raise revenue, Mthuli Ncube tightens tax grip; platinum miners face 100 % increase

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By Alois Vinga

FINANCE Minister Mthuli Ncube tightened the tax grip after announcing a100% tax increase for platinum miners, removing tax incentives for non-exporting companies operating in the Special Economic Zones among other stringent measures.

The developments come at a time some companies have remained reluctant to cascade the benefits of relaxed tax measures to citizens.

Even after selling their goods and services at prices rated against the parallel market rates, most of the companies are still reluctant to pay their employees accordingly.

A section of the business community has also been involved in scuffles with the government after being caught demanding foreign currency for goods and services despite accessing foreign currency from the Reserve Bank of Zimbabwe’s foreign exchange auction among other benefits.

Presenting the Mid- year Budget and Economic Review Statement Thursday, Ncube said the benefits which companies operating in Special Economic Zones (SEZ) are only available to licensed investors that export all their goods and services under the “qualifying degree of export orientation” criterion.

“It has, however, been observed that a number of companies licensed to operate in Special Economic Zones are claiming these tax benefits, notwithstanding their failure to attain the key criterion of “qualifying degree of export orientation”.

“I, therefore, re-affirm the current legislative position that only companies that export all of their goods and services are entitled to the specified tax incentives,” he said.

As a matter of urgency, the Zimbabwe Revenue Authority will, thus, collaborate with the Zimbabwe Investment Development Agency (ZIDA) in screening of corporates who should benefit from the tax concessions.

The treasury boss also approved a royalty rate of 5% for platinum miners, which is in line with other platinum producing countries in Africa with effect from 1 January 2023.

The royalty rate of 5% will also apply on lithium with effect from 1 January 2023.

Ncube threatened to withdraw tax waivers for companies failing to meet the government’s legitimate expectation of passing down benefits to communities after being awarded tax waivers.

“Government has a legitimate expectation that consumers should benefit from responsible pricing of products. The Treasury will, thus, not hesitate to withdraw tax incentives where beneficiaries fail to embrace the above principles,” he said.

In light of illicit tobacco trading and smuggling, Ncube proposed the sealing of production counters of individual production machines saying this will enhance the monitoring and enforcement mechanism, whereby the Zimbabwe Revenue Authority tallies production to specific duties.

In light of the abuses of the IMTT tax, the minister proposed to extend its coverage in a bid to block advantage taking.

“I, therefore, propose to extend IMTT to the internal transfer of money by Authorised Dealers with Limited Authority registered in terms of the Exchange Control Act.  For the avoidance of doubt, IMTT will not apply to inbound foreign currency remittances,” he said.

In the case of foreign currency denominated transfers, I propose to review the maximum tax payable per transaction from US$10,000 to US$20,000 on transactions with values exceeding US$500,000.

These measures are with effect from the 1st August 2022.