Zimbabwe changes tax regulation on data, smartphones
The Zimbabwe government has modified the tax regulation imposed on imported cell phones and data consumed by employees working from home to secure more revenue.
With the economy projected to grow by 5.5% in 2022 on the back of aggressive government spending to the tune of approximately US$8-billion, Zimbabwe is turning to unorthodox means of ensuring revenue collection.
And the telecommunications industry, already under pressure from multiple taxes, has been targeted.
In a presentation of the 2022 budget, Finance Minister Mthuli Ncube said the telephone, data and internet broadband “is not exclusively used for the employer’s business, hence it is imperative to prescribe the expenditure threshold attributed to the employer” for taxation purposes.
Ncube added that cell phone imports will now have to pay a US$50 levy because users were evading payment of the existing 25% customs duty on mobile handset imports.
“Imported cellular telephone handsets attract modest customs duty of 25%, the funds realised, however, point to evasion of the customs duty due to the nature of the items which can easily be concealed,” the Minister added. “In order to curb tax evasion, I propose to introduce a levy of US$50 which will be collected prior to registration of new cellular handsets by mobile network providers.”
Mobile gadgets have helped boost Zimbabwe’s internet penetration rate to above 50%, although WhatsApp and Facebook bundles still constitute a greater portion of the internet access in the country.
Mobile operators Econet and NetOne have introduced Wi-Fi bundles that have become popular, also helping to drum up usage of the internet beyond social media platforms.
The new levy on imported smartphones will not replace the 25% import duty on the gadgets, with the state revenue authority mandated to reimburse funds collected in cases where duty would have been paid.
“Where duty would have been paid, the Zimbabwe Revenue Authority will provide a refund of the levy, within 30 days of receipt of payment from the mobile network operator,” Ncube added.
This was expected to “ease the administrative burden when assessing the value of the non-monetary benefits attributed” to the employee for tax purposes.
“For purposes of simplicity in the determination of tax, I propose to apportion the cost of data and airtime at the ratio of 70 to 30 for business and private use respectively, unless the person entitled to use of the data or airtime proves otherwise,” noted Ncube.