Digital trade taxation looms

By Staff reporter | 01 Aug 2019 at 14:48hrs
THE Zimbabwe Revenue Authority (Zimra) is pushing for a legislation to cater for taxation of online transactions after realisation that digital trade has grown drastically with more citizens embracing the model.

The tax authority has joined the bandwagon of tax administrators around Africa in a drive towards a common position on taxing rights targeting the digital economy.

This comes amid realisation that the continent could be losing billions of United States dollars on the digital economy where acts of illicit trade, tax evasion and money laundering are feared to be rife.

Speaking at the ongoing Africa Tax Administration Forum (ATAF) here, Zimra Commissioner, Ms Faith Mazani, said it had been realised that the country has numerous online applications, some of them run by local telecommunication service providers where people transact and are not taxed.

Those in the diaspora buy groceries online and their families collect without paying tax, Commissioner Mazani said. She said Zimra has no technical capacity and rights to tax the digital economy hence the need for an enabling policy.

"As Zimra we are happy to be hosting this conference and we hope through the interactions with other African tax administration, we together with ATAF, can try to look at how we can communicate with our policy makers so that when they craft laws they are actually aware of some of the challenges in the economy  

"In the Transitional Stabilisation Programme (TSP), Zimra was tasked to provide domestic resources and secure fiscal balance for the country and while policy makers are looking at attracting foreign direct investment, there is more business that is coming through the digital economy that as Zimra we should actually equip ourselves to ensure that we tax just like we tax the other businesses," said Commissioner Mazani.

She appealed to Government to facilitate the process through funds allocated to digitalisation projects in the country's budget.

Commissioner Mazani also called on Government to capacitate tax administrators, build appropriate systems and also address issues of exclusion, where a majority of citizens are in the informal market, which trades outside the taxation system.

"Zimbabwe, just like other developing countries, we are battling to secure taxing rights from business coming in on the digital platform. This is a challenge we have as a revenue authority. We are not ready because our policies are lagging behind as policy makers are still battling with physical businesses to attract foreign direct investment of people coming to set up business here," she said. "But there is much more that we can actually have if Government puts up adequate policy to secure taxing rights," said Commissioner Mazani.

She said there was potential revenue on the digital economy yet Zimra lacks even technical equipment to harness it. ATAF executive secretary, Mr Logan Wort, said the three-day conference was a platform to bring policy makers and tax administrators together at continent level to discuss the issue.

"The reason why we called this meeting is because historically, not only in Africa but in the whole world, there is a disconnect between administration and collection of tax. This meeting is meant to bring policy and administrators together to discuss implications of digital economy on the domestic tax base," he said. Chairperson of the continental body, ATAF chairman, Mr Tunde Fowler, said trade has continued to become digital as people buy online yet the tax administrator has no taxing rights.

"We have to ensure that Africa has a common tax position to protect revenues hence we have to come up with our own position now," he said.

Victoria Falls Mayor, Councillor Somvelo Dlamini, challenged tax administrators to increase tax awareness among citizens to encourage them to pay taxes.



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