Wednesday, June 12, 2013

(HERALD ZW) Biti in climbdown on Tax Bill
Tuesday, 04 June 2013 00:00
Zvamaida Murwira Senior Reporter

FINANCE Minister Tendai Biti yesterday made a major climbdown by making several concessions to the Income Tax Bill after a parliamentary committee on Budget, Finance and Investment Promotion raised reservations on it.

The committee, chaired by Goromonzi North legislator, Cde Paddy Zhanda (Zanu-PF) raised issues that they had gathered during public hearings conducted in several cities. Most stakeholders castigated the Bill.

Stakeholders said if the Bill was implemented the public would be taxed in virtually every earning they got, including presents. Those in the Diaspora would also not be spared from taxation.

Minister Biti consented to about 11 amendments raised by the committee but declined to do so on four other aspects.

“I am happy with the work you have done. I have accepted most of what you have suggested and rejected few. We have rejected because there are things you might not know that we know or how to break the law inside it,” said Minister Biti while concluding his response.

Minister Biti said he would effect some amendments immediately while others would be contained during his mid-term fiscal policy statement which he said would be made towards the end of June. He said he would amend some provisions of the Finance Act.

He said debate on the Bill in the House of Assembly would now resume tomorrow (Wednesday) instead of today (Tuesday) to allow inclusion of the amendments.

One of the amendments the committee raised was clause 26 that sought to levy taxes on Diaspora funds which the committee felt would lead to drying up of such funds coming to Zimbabwe.

The committee said it was unfair to tax people in the Diaspora. The effect would be to punish a grandmother in the rural area receiving money from her grandchild, noted the committee.

“There are things we are prepared to concede. We are going to examine the Diaspora income. In other words, going to individuals, it will not be treated as part of their taxable income,” he said.

One of the amendments that Minister Biti consented to was the clause on penalties where the Bill sought to impose 100 percent penalty on non-compliant individuals and corporate.

Stakeholders complained that proposed levels of penalties and interest for unpaid taxes were high and were being levied on minor infringements like delaying even by a week.

Minister Biti said he would make clarifications and improve the language used in the Bill.

Another clause he consented to related to the US$10 000 as the maximum deduction allowed on motor vehicles which stakeholders felt that the amount was too low hence it encouraged people either to buy second hand vehicles or those that were unsafe since good ones hovered around US$25 000.

“We appreciate the comments, so we will revert to the status quo as in the current Act based on engine capacity,” said Minister Biti.

On resident based system, the Minister conceded to give an amnesty on taxpayers on condition that they make full disclosures of foreign assets and pay an appropriate figure to be decided.

Minister Biti, however, noted that most people who complained on the provision were not ordinary people but big corporates carrying out business in Zimbabwe but with their head offices outside.

The migration from source based to re-sent based, he said, was consistent with the best practice.

He also conceded that there was need to improve certain terms that the committee felt were ambiguous.

The Minister said some of the reservations raised were premised on ‘unfounded fear’.

He agreed to include a provision on the interpretation clause that a court was bound by the law of precedence in interpreting the tax law to allay fears from stakeholders.

Some of the provisions he declined to concede related to submission that employees from the private sector should not have their housing and transport allowance as what happens with civil servants.

The other aspect was on Capital Gains tax after Minister Biti allayed fears that arose from the committee that the Bill seemed to assume that the entire proceeds of such assets were taxable without any deductions.

The Minister also accepted to embark on a massive education of the public on the Bill raising awareness.

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