Taxman targets informal sector

Mr Pasi

Mr Pasi

Peter Matambanadzo Senior Reporter
Government is working on a cocktail of measures to formalise small and medium enterprises so that they pay taxes and directly contribute to economic growth. Experts from South Korea will assist the Government in formalising a sector that is said to hold US$7,4 billion, most of which never — or only fleetingly — enters formal channels.
Fiscorp, a private financial company was funded by the World Bank in 2012 to assess Zimbabwe’s informal sector and its report — published, accepted and then launched by the Government in July 2013 — said billions of US dollars were being handled by unregistered SMEs.

The report stated that 5,7 million jobs had been created from 2,8 million small businesses, while 800 000 medium-sized firms were employing 2,9 million people.

Addressing delegates at a symposium organised by the National Business Council of Zimbabwe in Harare yesterday, Zimbabwe Revenue Authority Commissioner-General Gershem Pasi said the informal sector would soon start being formalised.

The symposium ran under the theme “Aligning indiginisation and Economic Empowerment Act with Zim-Asset — Opportunities for Business”.

“At the moment we are finalising programmes to bring order to various informal sectors and they should be launched within the end of the year so that we move and they start playing a meaningful role,” Comm-Gen Pasi said.

He said a Zimra; the Local Government, Public Works and National Housing Ministry; the Small and Medium Enterprises and Co-operatives Development Ministry; and other Government arms were working on the matter.

Comm-Gen Pasi said a team of experts from South Korea would be visiting Zimbabwe to assist with formalisation of the SMEs sector.

“One of the programmes we are also working on and Government will avail soon is the self-service centres. We are now going to be brining ARMs, Automated Revenue Machines; again we have our technical partners, I am sure they should arrive this week so that we finish our project.

“It is high time we protected and formalised the SMEs in order to preserve their diversity. We need to focus on how to nurture and provide decent accommodation and operating environment,” he said.

Comm-Gen Pasi said Zimra could not merely wait to tax businesses, but should assist in properly structuring them.

He said SMEs could grow into big brands as had been the case with Samsung and LG.

“If we create order we create areas where people can do honest business because every citizen must be proud of contributing to the nation by paying taxes,” he said.

Comm-Gen Pasi said chasing away vendors and other informal businesspeople from the street was akin to chasing away revenue.

“We can’t have revenue when we chase people away. We create order and create areas where people can do honest business and everyone must contribute to development of nation. We need an innovative way of creating that,” he said.

Economist Mr Witness Chinyama said the US$7,4 billion touted to be in the informal economy was not a far-fetched figure.

“The informal sector is vibrant and is very big. This is where the majority of the people are employed,” Mr Chinyama said.

Another economist Mr Best Doroh agreed that the informal sector was growing significantly, but quirried the US$7,4 billion figure.

“Yes the informal sector has been absorbing all excess labour, but it’s difficult to say the figure is correct. We need to carry out a comprehensive and detailed study to demistyfy the figure,” Mr Doroh said.

Pin It
  • moriartyO

    Hahahahaha!!! I thought Chinamasa just recently said he was behind the idea of letting the informal sector flourish!! Chii chachonja!?! Haha! Utter confusion!

  • dziva

    Ana Gersham, pass the baton onto someone else with fresh ideas! Corrupt activities have greyed your hair and brains!

  • take it [email protected]

    U re now talking. We need to give back something to the community. The informal sector is not paying tax. It will create clean business. Vane macomb re they paying tax. Welldone Mr Pasi, it works. There is a lot of work to be done without affecting the community. Musikana webasa nemkomana webasa must be treated equally like any other employee. Minimum wage. Job creation. Mavendor no more kumhanyiswa nemupurisa wecouncil.

    • Munhu

      I believe Jonathan Moyo once called this ” normalizing the abnormal”. How can a country de-industrialist when all other economies are industrializing? We are going towards disaster. The solution is to change whatsoever is behind deindustrialisation…corruption and unfriendlypolicies. It’s like giving a patient a drip without fixing the sewage leaks causing his diarrhea. He gets better but goes back to drinking the sewage infested water.

  • take it [email protected]

    Ha

  • gabriel tandi

    i will not pay my money unless corrupt people are arrested

    • Panonetsa Shuwa

      ..They have no problems arresting you for standing up for transparency and justice whilst turning a blind eye to those steling your tax contributions.. cry my Zim!

    • uMkhonto

      The government is its own worst enemy. The government is responsible for this mess.

      THE SOLUTION TO THIS MESS IS AS FOLLOWS;

      1. The government should stimulate investors into the country so as to open factories, companies for people to get employment. In turn these companies will pay tax to the government and hence be able to afford service delivery.

      2. The government should STOP SCARING AWAY INVESTORS. The government is shooting its own foot, and guess what, South Africa is benefiting from this. Now investors prefer South Africa over Zimbabwe. The government is indirectly campaining for investors to go to South Africa instead of Zimbabwe. Example, China build a huge complex to sell goods to Zimbabweans, but this complex was not build in Zimbabwe but rather in Mussina South Africa. The Chinese in Mussina are even enticing customers through speaking in Shona and Ndebele.

      3. South Africa is thriving because it does not scare investors. There are even many Zimbabwean investors in South Africa mainly because our government is scaring them with its contradicting policies. The Zim government tounge is forked like that of a reptile, it tells investor to come and voetsek (go) in the same breadth.

      4. The so called indegenisation policy is not unique to Zimbabwe, its also there in our neighbouring Botswana. The Zim government should ask itself this: Why is theindegenisation policy working nicely for the Botswana people while ours is SCARING INVESTORS. The Zim government should emulate DEBSWANA (a company partnership between DEBEERS and Botswana government).

      5. The Zim government should create an enabling working environment for business so as to maximise tax revenues.

      6. The Zim government should be open to constructive criticism.

    • ADM

      Then who will pay your children’s teachers, nurses, etc? Think before you utter, gabriel tandi. We don’t condone corruption, but neither do we support solving one problem by creating two more.

  • Tarisai Gogo

    If you go at ZIMRA Offices, the employees treat you with disdain yet you want to give them money. They used to think you cannot make business in Zim without their papers, they were wrong. Now they have to come to us and we treat them with disdain.

    • JSC

      I agree with you on the attitude of the ZIMRA officials, I know people who have resorted to becoming informal because the ZIMRA crew frustrated their efforts towards formalizing. Offering a service to the people doesn’t make you their owner, as such, treat people with respect and dignity.

      • Chief Svosve

        I fully agree with you guys, enda kuBeitbridge kuManica Zimra office where you pay duty for cars. Prospective customers are treated like beggars, no shade, no benches or chairs to seat absolutely nothing for the paying public and yet everyone who passes through there pays at least US1000 to Zimra yet they treat us like dogs.

        • barushnikov

          yes so true about the zimra guys they treat u in such a humiliating way like as if they are doing u a favour and u are a cheap person …they take their time and look at u badly and frustrate u instead of helping u ..

  • Panonetsa Shuwa

    Now they want to steal the little people were surviving on instead of growing the formal sector! This will lead some of these informal guys out of business.. shame.

    • ADM

      Panonetsa shuwa, you want them to concentrate on growing the formal sector? For your information that sector is grown from what starts as informal sector, so I don’t see any disagreement between you guys!

  • Makhoikhoi

    Uku ndiko kupererwa kwamava kuita, how much resources are you going to expend in chasing those informal traders; its counterproductive, u r merely grandstanding here and its a disguised siphoning of money under the auspicies of consultants. Just another looting scheme, the only solution here is to change government policies so as to attract FDI, the rest will follow and fall into place accordingly.

  • Taurai huni

    Zvimwe zvinhu so yaah. is this practical to collect tax from this sector when you are failling to collect from establisehd companies and societies. please dont insult our intelligence if you have nothing to say mumameeting umu shut up.

  • Baba Maka

    I agree, the magnitude and degree of the informal sector and SMEs in the economy should also not be under-estimated and neglected, and these sectors should be brought into
    the mainstream economy, and be allowed to fully contribute to the fiscus.

  • ginger brown

    sure $7.4 billion plz don’t joke, that’s a massive amt of money that yu are talking abt, no its much less, judging by the standard of living of these pple in smes’

  • non aligned

    You have realised that the formal sector has since died and you now want to kill the informal sector as well. First provide loans and infrastructure to the informal sector then do your taxing.

  • Musimwa81

    You don’t need an “expert” from Korea to figure out some of these things. Even l can tell you a good chunk of what needs to be done. Our challenge is that our government wants to make money were they have not made an initial investment. The reason why Pasi and his team have not been able to generate revenue from SMEs is because they have no clue who these SMEs are, what they do and wr they are……. or a system of monitoring/tracking them. Figure that out and that’s half the fight. Next government needs to provide the necessary infrastructure. I tell you if we can put most of these SMSs in spaces we create for them, we can easily create the foundation or the data base needed to do the rest. If I operate my PROFITABLE business under some tree in Mbare or at the back of my house, other than you being the gvt, what basis do you have for wanting to tax me. Hell no!! Granted,The solution is expensive but once done it will yield long term benefit. What we did with toll gates, doesn’t work in other sectors. We all know that with Toll gates gvt made so much money from little or no initial investment. It was only after they had made the money that they begun to put up proper infrastructure and systems (Well built toll gates & roads etc). Credit to the gvt, that worked well but for other areas, they will have to spend the money 1st, then reap the benefit (In increased tax income)

  • Professor.

    If you knew what informal sector is all about you wouldn’t say all this nonsense. You cannot tax informal business, if ever u manage it was not informal in the first place. Informal means underground.

    • joemuda

      your lack of understanding is astounding. Informal things can be formalised.

      • kabias

        Your own ignorance is obscene.

        By definition what is informal? Do you think its a place in town you go to and say that’s informal over there….and there and there….

        An informal sector is exactly that! Informal. Not in books.No paper trails. No formal banking. No tax reporting.

        Its there but formally is intangible.

        We’ll be back to touch base.Time never lies.

    • ADM

      Oh! Professor, I hope you have not taught that definition to anyone. Informal simply means not registered. Many of the informal businesses are actually quite big, and trade openly with auditable financial records kept. Yes there are many informal businesses that do business underground, but thats not the definition of informal sector.

  • LOLOLO

    Why are we getting experts from South Korea yet we Zimbabweans claim to be well educated and skilled. Are we not going to spend a fortune paying external consultants? Ummmm?? The way we plan does not reflect what we claim ourselves to be. We claim to be educated and vastly skilled yet we demonstrate utter ignorance and lack of skills.

    • observer

      True, hey vanhu vakuona manje.

    • ADM

      Agreed LOLOLO. South Koreans will not be able to handle the local informal business terrain. They will just charge millions of dollars, and walk away without resolving our problem. Did we ever flight a local tender and found no takers for this assignment? State Procurement Board, where are you?.

  • JZ

    will banks have inclusive financial products for the informal sector. you have to realise the informal sector is made up of people with productive skills who have been excluded from the mainstream economy by discriminatory systems. before you tax them ensure they have support by lobbying formal institutions to change their attitude. plain and simple give opportunity to the informal entrepreneur, opportunity in the market, opportunity through training and information technology infrastructure and financial opportunity . To start. where are the awards for best performing informal sector businesses? Without awarding best performers in informal sector we cannot take advantage of skills and capital growth opportunities in that sector. selling air time is business if it gives value to customers so before your tax the air time vendor give him support.

  • MweniTafara

    If you are small business and go to the bank for corporate account they tell you to bring balance sheet for 10 yrs asi iwe tanga business nhasi.

  • Him

    Instead of taxing SMEs and the informal sector Gershem, think about reducing your own salary which is in excess of 200K.Gvt should get its house in order 1st. Why should the informal sector pay taxes when the money will be looted by gvt? Show us that you can be accountable with public fundsTHEN start talking about taxing the informal sector.

    • observer

      True, one would think this is basic logic but hameno kuti tiri kurasika papi.

  • Taonaziso Chowa

    fight and win the war against corruption first

  • Dr Know

    For as long as I’m assured and there is proof that my hard earned money will not go into a few individuals’ pockets then I’ll be happy to contribute.

  • Harare

    More money is needed ,is there another wedding coming up

  • Realist

    How much has the ZANU PF’s Chiyangwas, Zhuwaos, Temba Mliswas etc paid in taxes? How much ? Zero? The buck starts there?

    • ADM

      Yes, the Chiyangwas, Zhuwaos, Temba Mliswas, Realists etc must pay their taxes first, Hahahahaha, Realist!

  • Wilson Magaya

    Biggest challenge is that all Zimbabwe is seeing is the revenue. The money not the growth opportunity. I hope we are formalizing these businesses to tax them not to grow them. What does it take to grow a Samsung out of Glenview SME? Is it tax or tax holidays and a concerted effort to get these business thinking business. Be careful that we will give huge concessions to multi-billion dollar deals and tax SMEs to the hilt

  • Dopiro

    Ko Ivo Mr Pasi pay slip yavo yakazowanikwa here?

  • Guvnor

    Informal sector includes the boys Ximex Mall. How the hell are you gonna tax them when 97% of their wares are stolen or the push cart vendors that sell bananas! Only place you can catch them is where they buy their wares from (VAT) as long as it is not from Mbare but then their produce is not VATable!! I stand to be corrected here but a quick look at who these vendors are will show you that the majority are airtime, fruit vendors, peasant farmers that bring 5 to 10 bales of tobacco yearly and combi touts. The other informal sector worth talking about really is Mupedzanhamo or Siya Soo otherwise the others are actually partly formalized small businesses that occupy most of the downtown buildings in town that are actually registered but do not pay any form of taxes at all. ZIMRA simply needs to catch a wake-up otherwise I think the long and short of this is they want to broaden the 10% withholding tax blanket.

  • alberta dreamin

    LG .SAMSUMG ana zimra vashaya zvekutaura

  • mukwerekwere

    Good luck taxman!

  • Big Dhara

    Let’s celebrate the independence of Zimbabwe!
    Tell us how much you love Zimbabwe?..

    http://www.zimyo.com/topic/let-s-celebrate-the-independence-of-zimbabwe

  • ProudZimbo

    MATTHEW 22:[16] And they sent out unto him their disciples with the Herodians, saying, Master, we know that thou art true, and teachest the way of God in truth, neither carest thou for any man: for thou regardest not the person of men.
    [17] Tell us therefore, What thinkest thou? Is it lawful to give tribute unto Caesar, or not?
    [18] But Jesus perceived their wickedness, and said, Why tempt ye me, ye hypocrites?
    [19] Shew me the tribute money. And they brought unto him a penny.
    [20] And he saith unto them, Whose is this image and superscription?
    [21] They say unto him, Caesar’s. Then saith he unto them, Render therefore unto Caesar the things which are Caesar’s; and unto God the things that are God’s.
    [22] When they had heard these words, they marvelled, and left him, and went their way.

  • ProudZimbo

    My fellow brothers and sisters we at the end of the day should not be hypocrites , we are required by GOD to do as it is spoken of in Matthew 22 . It is our responsibility to give to our government due taxes as well as giving GOD HIs share ( Tithes) as well . What the relevant people that receive these taxes and tithes do with them is not our responsibility . GOD is faithful to HIS WORD , so don’t be despondent because your blessings will come as long as you heed to HIS WORD .
    What Zimra should do is investigate every person that is building and has built these mansions to see where they got their funds from and if they remitted what was due to the the taxman . We are all hypocrites because we are also destroying our own beloved Zimbabwe by not doing as GOD ‘a WORD tell us to do .