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Zimbabwe Finance Minister Says Local Economy to Grow By 7,5% As Nation Proposes New Business Taxes

Finance Minister Mthuli Ncube

Zimbabwe’s finance minister, Mthuli Ncube, says the local economy is expected to grow by 7,5 percent in 2021, backed by a stable exchange rate and other financial measures.

Presenting the country’s national budget in Harare on Thursday, Ncube said the economy is expected to rebound as a result of marked production in various sectors, including agriculture and mining.

He further proposed the taxation of small businesses.

He said the government expects to collect taxes and related incomes of up to $390,8 billion with a projected budget deficit of $30,8 billion next year.

Ncube put the projected government expenditure at $421,6 billion with employment costs accounting for at least $142 billion.

The country’s annual inflation is projected to hit an average 135 percent next year.

Ncube told parliamentarians that the government also expects to collect taxes from small businesses in order to boost its budget.

He said government has implemented a presumptive tax structure on informal businesses, including micro and small enterprises so they can contribute to Zimbabwe’s fiscus.

Ncube noted that some of these enterprises operate in places like the Gulf Complex and Nkwame Mall in Harare, which are owned by either the local authority or private companies.

He said the enterprises occupy designated units, which can make it easy for them to account for their activities.

“The fixed nature of business, thus, presents an opportunity for the tax administration to improve tax collections from presumptive taxes. I, therefore, propose to introduce a presumptive tax of an equivalent of US$30 per unit per month.

“Landlords will be responsible for the collection of the above taxes which take effect from 1 January 2021. Landlords that fail to collect and remit the tax will be subject to a penalty equivalent to the amount of tax payable and interest. Furthermore, landlords have the responsibility to keep accurate records regarding the number of occupants or operators in respective properties, in order to facilitate administration of tax.”

Ncube further proposed to review upwards the tax-free threashold from $5,000 per month to $10,000 and tax bands to begin at $10 001 and end at $250 000 per month, above which the highest marginal tax rate of 40 percent will apply. These measures are with effect from 1 January, 2021.

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