HARARE – Zimbabwe Treasury has drafted measures to thwart tax evasive tuckshops, runners, and small businesses in a bid to save the plummeting formal sector.
This comes after retailers raised concerns over the unregulated but thriving informal sector, which they argue offers goods at much lower prices, largely because it operates outside compliance with statutory obligations such as registration, taxes, licensing fees and labour laws.
The formal businesses in Zimbabwe, such as Food World, Pick n Pay, OK Zimbabwe, Choppies, and PoweSales, have been nose diving while the informal sector is thriving.
Finance Minister Mthuli Ncube’s latest measures to support formal retailers include tax compliance and cutting manufacturer’s direct supply to tuckshops and other small businesses.
Ncube blames the economic crisis on competition from the informal sector, poor management, and poor corporate governance, which has resulted in formal business failures.
In a statement by the Finance Ministry, measures imposed on the informal sector include:
“Deemed smuggled products and certain goods such as alcoholic and non-alcoholic beverages, dairy products, washing powder and detergents and sugar, among others, are now deemed as smuggled unless the seller provides documentary evidence that customs duty was paid for.
“Government reduced the VAT registration threshold from US$40 000 to US$25 000 to promote formalisation of the informal sectors.
“Point-of-Sale machines – Micro and Small Enterprises are required to transact through Point-of-Sale machines and operate a bank account linked to the Zimbabwe Revenue Authority,” reads part of the statement.
Treasury further resorted to cutting fees and processes to reduce costs for formal businesses.
Ncube said the reason why retailers were under pressure was due to increased informalisation of the economy and rampant smuggling.
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