MASVINGO — The Association of Chartered Certified Accountants in Zimbabwe (ACCA) has petitioned Finance minister Tendai Biti to make amendments to the Income Tax Bill, to align it with other existing tax treaties and international trends.
Report by Tatenda Chitagu
The proposed legislation, which has come under heavy criticism, is set to replace the existing Income Tax law.
In a letter dated May 29 addressed to Biti, ACCA services manager Cuthbert Munhupedzi said there are a few “housekeeping issues” that need to be ironed out before the Bill is passed into law.
“Some clauses are ambiguous, especially Section 7, which talks of resident individuals,” part of the letter reads.
The section of the Income Tax Bill provides for “normal place of abode”. There is need to define the term “normal place of abode”, alternatively to change it to a clearer unambiguous term.
“On the issue of resident companies, we feel the basis of measuring ‘majority of its operations’ needs to be defined to avoid ambiguity.”
Munhupedzi said this concept was not consistent with international practice and suggested that it be dropped.
He said the new tax regime will further burden the already impoverished workers.
“The new regime, while certainly aimed at increased revenue to the fiscus will place a very serious burden on employees that could not be compensated by the majority of companies,” he continued.
“We propose that the terms being modelled along the existing tax treaties.”
Munhupedzi also proposed the removal of additional profits tax.
“The administrative complexity of changing the system from source to residence for active income militates against the introduction of such a system,” he said.
“The country would therefore need to invest in technology and legal infrastructure to ensure full benefits of the system are reaped.
If passed into law, the Bill will widen the government’s tax base, as it proposes that Zimbabweans in the Diaspora and offshore investments be taxed.
The Bill was gazetted to amend the current Income Tax Act and if approved by Parliament and assented to by the President, will become effective on January 1 2014.