HARARE, March 28 (The Source) – Zimbabwe must reform its tax laws to become a competitive investment destination and encourage productivity in the economy, a global accountancy firm said on Friday.
Zimbabwe’s tax regime is considered as one of the most difficult and expensive, with the country ranked 142 out of 189 countries on the ease of paying taxes in the World Bank’s Doing Business Report last year.
In a critique of the country’s tax regime produced for the Zimbabwe National Chamber of Commerce released on Friday, Ernst & Young Zimbabwe said reformation would reduce the total tax burden for companies and investors.
“Reforms must not focus only on tax rates and incentives but on the other critical factors that impact on the ultimate total tax cost,” it said.
“Resources therefore need to be channelled to the review of the wide range of administrative and tax compliance issues if the local tax system is to be competitive.”
The study compared Zimbabwe’s tax regime with those of the BRICS – Brazil, Russia, India, China and South Africa as well as Angola, Mauritius and Zambia.
Ernst & Young said tax legislation review was not keeping up with the “dynamic business environment.”
“Favourable tax rates are negatively impacted by an inefficient tax administration process,” the accounting firm, said.
Government must consider incentives such as tax holidays equal to 100 percent of profits for companies engaged in infrastructure development, generation and distribution of power as well as for companies that invest in special zones such as Bulawayo, it said.
Tax cuts should also be granted for projects established in support of development efforts under the country’s new economic blueprint, the Zimbabwe Agenda for Socio-Economic Transformation (ZimAsset).