Zimbabwe’s Initiative to Revise Taxes and Regulatory Fees: A Path to Simplification and Growth

Zimbabwe is set to revise taxes and regulatory fees, aiming for a 50% reduction across sectors within six months to simplify business operations and enhance growth. President Mnangagwa emphasized the necessity for a conducive economic environment. The existing tax structure imposes high costs on businesses, particularly affecting SMEs, and this reform seeks to alleviate those pressures.

The Zimbabwean government aims to revise taxes and regulatory fees within six months to simplify the licensing system and reduce bureaucratic barriers for businesses. A new high-level committee has been established to reassess current regulations, influenced by industry leaders’ concerns regarding high operational costs. The initiative aims to minimize associated fees by reducing them by 50% across all sectors, which is anticipated to relieve financial pressures and promote economic growth.

During a recent Cabinet meeting, President Emmerson Mnangagwa urged the acceleration of eliminating burdensome regulations and costs imposed by government agencies. He emphasized that taxes, licenses, and permits should foster economic development rather than obstruct it. The existing business environment is currently characterized by high tariffs and complex regulatory structures, which have increased operational costs and hindered business viability.

Professor Mthuli Ncube, the Finance, Economic Development, and Investment Promotion Minister, revealed plans to halve the number of taxes. He indicated that a governmental committee will evaluate which taxes and fees can be reduced or removed to facilitate business operations. He acknowledged the high cost of doing business and the need to refine regulatory fees, suggesting a reduction in licensing requirements based on regional and international benchmarks.

According to a report by the Confederation of Zimbabwe Retailers, excessive regulatory requirements significantly burden the retail sector, especially affecting small and medium enterprises (SMEs). Currently, a supermarket may need over 30 different licenses and permits, including health and safety approvals and trading licenses, which can increase operational costs and discourage investments.

For instance, various licenses required by a supermarket in Harare incur substantial fees, such as a bakery license costing $703 and a butchery license at $649. In addition to municipal fees, there are national regulatory obligations that include charges for product category licenses and emissions permits, culminating in a considerable financial burden.

The multitude of regulatory demands challenges formal retailers, pushing some toward informal trading, which avoids compliance costs. Consequently, formal retailers often struggle against informal competition and illicit smuggling activities, leading to a skewed market where genuine tax-compliant businesses grapple to remain viable.

Furthermore, CZR president Mr. Denford Mutashu highlighted that aside from high licensing fees, considerable expenses such as rent, salaries, and utilities contribute to the challenging business environment for retailers.

President Mnangagwa reaffirmed his administration’s commitment to improving the ease of doing business, stating that addressing the regulatory factors hindering investment growth is essential. In comparative terms, other regional nations impose fewer licensing requirements, underscoring the need for Zimbabwe to reform its complex regulatory framework.

The Zimbabwean government is taking steps to reform its tax and regulatory system, aiming for significant reductions in both to enhance the business climate. An established committee will evaluate and streamline these processes, potentially halving the number of taxes and fees within six months. This initiative responds to concerns from industry stakeholders and aims to relieve the financial burdens faced by businesses, particularly SMEs, fostering a more competitive economic environment.

Original Source: www.zawya.com