Tuesday was the deadline for companies to submit their tax amnesty forms to the Zimbabwe Revenue Authority (ZIMRA) but not much money had trickled into state coffers by the end of the day.
Industry is warning that forcing non-performing companies to pay taxes in arrears amounting to over one billion dollars is disastrous and will lead to massive company closures.
ZIMRA had set the dates for businesses to apply for tax amnesty from October 2014 to March 31st, 2015.
The period of payment is from October 1, 2014, to December 31st, 2015. Government’s revenue target for 2015 is US3.951 billion of which US$3.76 billion is supposed to be derived from tax.
President of the Employers Confederation of Zimbabwe John Mufukari told VOA Studio 7 that most companies are struggling and they will close shop if they are forced to pay arraers to the revenue authority.
Chief economist of Resource Exploitation Watch, Washington Mehlomakulu concurs saying companies must be given at least three years to pay arrears.
Industry and Commerce minister Mike Bimha told a Doing Business Reform strategy meeting organised by Word Bank last year that local industrial capacity utilisation will fall way below the estimated levels of 30% on the back of massive disinvestment.
Capacity utilisation is the percentage of the firm’s total possible production capacity that is actually being used.
The Confederation of Zimbabwe Industries (CZI), which conducts annual production surveys to estimate the local industry’s capacity utilisation, estimates industry optimisation at around 30%.