MPs pin Mthuli Ncube on corporate tax obscurity

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By Staff Reporter


MPs have called on the Ministry of Finance and Economic Development to disclose the list of companies that pay corporation tax to the government as part of measures to improve transparency in public administration.

The government struggles to collect enough taxes to fund state operations.

Most companies operating in the small and medium enterprise sector are not registered and it is difficult to monitor their compliance with legal obligations.

However, corporation tax remains the main source of government revenue, which contributed 25.24% to total revenue last year.

During the debate in parliament last Wednesday, lawmakers demanded explanations of the steps taken by the government to improve the disclosure of corporate tax receipts.

“I address my question to the Minister of Finance and Economic Development (Mthuli Ncube).

“We have noted that Zimra’s (Zimbabwe Revenue Authority) revenue generation and tax expenditure reports are only included as a small summary in the budget statement,” said James Chidhakwa, MP for Mabvuku-Tafara. .

“What is the government’s position on corporate tax disclosure, tax expenditure reporting and making it available to the general public given that the report is not even in the public domain?” he asked.

Zimbabwean law and stock exchange listing rules only require listed companies to publicly disclose profits and statutory payments in their financial statements.

The Companies and Business Entities Act is silent on public disclosures by unlisted companies.

More than 60% of Zimbabwe’s economy operates informally, according to estimates by the International Monetary Fund.

And with only 40% of the economy operating formally, there are fears that the majority of small and medium-sized businesses do not comply with the requirements of the Companies and Business Entities Act.

Experts have warned that the government could be shortchanged billions of dollars in revenue a year by companies operating in the informal economy.

Clemence Chiduwa, the deputy finance minister, told lawmakers that only listed companies were required to disclose publicly under Zimbabwe Stock Exchange listing rules.

“Disclosure of corporate information is guided by corporate law,” Chiduwa said.

“In cases where a company is listed on a stock exchange, that’s where we can disclose all the information because it’s public information, but when we deal with a private company that is not listed on a stock exchange, we don’t we cannot disclose the finances to the public.

“It is a requirement under the rules of the Zimbabwe Stock Exchange that all listed companies (publish) their financial statements.

‘Unless the Honorable Member wishes these financial statements to be published specifically by the Department of Finance, it is compulsory for all listed companies to publish in newspapers.’

After further investigation by lawmakers, Chiduwa said he needed more information on which companies can disclose corporate tax and promised to do more research on the issue.

Sections 183 and 184 of the Companies and Business Entities Act mandate the disclosure of all financial information of a company during its fiscal year without the precondition that the company be listed on a stock exchange.

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