HARARE — Zimbabwe's Finance and Economic Development Minister Patrick Chinamasa proposed an amnesty for interest and penalties on outstanding taxes accrued prior to December 1, 2017 for taxpayers who come forward and settle their obligations within the period ending June 30, 2018.
He said the amnesty comes as Government recognises that the economic challenges experienced over the past decade have resulted in a number of companies failing to meet their tax obligations. Government will also consider a moratorium on tax arrears owed by companies that benefited from debt assumption by the Zimbabwe Asset Management Corporation as turnaround efforts by some of the companies were affected by the adverse macroeconomic environment, exacerbated by significantly high tax arrears to ZIMRA.
"In support of initiatives to restructure the balance sheets of these companies, Government will consider, where warranted, a moratorium on tax arrears owed by companies that benefited from debt assumption by the Zimbabwe Asset Management Corporation," said Minister Chinamasa.
Government, through the Reserve Bank of Zimbabwe, created the Zimbabwe Asset Management Corporation as a special purpose vehicle to house banking sector non-performing loans.
Minister Chinamasa also proposed to ease the tax burden on tobacco farmers by exempting them from the requirement to withhold a 10 percent tax on sales at the Tobacco Auction Floors after farmers had accumulated significant tax arrears.
"Whereas a significant number of taxpayers have been complying with the requirement to withhold tax from non-compliant businesses, this has not been the case with Tobacco Auction Floors on sales by farmers.
"In order to ease the tax burden on tobacco farmers that are experiencing viability challenges, the 2018 Budget proposes to exempt registered buyers of tobacco from the requirement to withhold the 10 percent tax with effect from 1 January 2018."
Minister Chinamasa also made changes to the VAT on output tax charged by suppliers of goods and services: "Following realisation that some registered operators were under-declaring the extent and value of their supplies to large corporates, thereby suppressing the output tax charged and potential VAT remittances to ZIMRA.