Zimbabwe turns telcos into tax collectors
Zimbabwe, which already levies a 25% tax on imports of
smartphones and another on voice and data top-ups, has introduced a new $50
levy on imported cell-phone devices. This is part of a move to ramp up revenues
to meet government expenditure which is expected to nearly double to $8 billion
in 2022.
Zimbabwe, whose economy is projected to grow by 5.5% next
year according to the country’s finance minister, already levies a separate 2%
tax on all electronic financial transactions.
The new levy on imported handsets will take a novel form.
Instead of the tax being collected by state revenue authorities on imported
electronic gadgets, the Zimbabwean levy will be collectable by mobile operators
on registration of the cell phones. This is to avoid people evading the tax by
hiding new phones when imported.
“I propose to introduce a levy of $50 which will be
collected prior to registration of new cellular handsets by Mobile Network
Providers,” finance minister Mthuli Ncube said in a 2022 Zimbabwe Budget
presentation he tabled in parliament on Nov. 25.
He explained that although “imported cellular telephone
handsets attract modest customs duty of 25%, the funds realized, however, point
to evasion of the customs duty due to the nature of the items which can easily
be concealed” at the country’s ports of entry. The new $50 levy on handset
imports is a revenue enhancement measure, said Ncube, in a move that has been
criticized by Zimbabweans on Twitter as “retrogressive”.
Wendy Muperi, a Zimbabwean political scientist, said via
Twitter: “I think it’s retrogressive and should be removed rather than enforced
until we can manufacture our own [handsets.]
Aren’t we supposed to be promoting tech advancement?”
Zimbabwe’s smart phone penetration stands at around 52%,
compared to about 90% for South Africa, and it “remains a limitation for the
adoption of digital services,” James Myers, chairman of telco, Econet, said
last year. He also said that low data
handling capacity feature phones made up approximately 22% of the devices on
the company’s network.
However, according to the Zimbabwean treasury chief, “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
operators” mandated to collect the new tax.
The telecom operators and the telecom industry regulator,
will likely come up with modalities for collection of the new levy on cell
phones purchased elsewhere, with options likely to include a fee on
registration of new SIM cards usable in new phones or a registration fee before
a new gadget can be used.
Econet, the biggest mobile operator in the country, says
that since last year it has been closely working with the government to review
the duty regime for mobile devices to enhance the rapid adoption of digital
services across the country, but will now find itself having to collect levies
on behalf of the government.
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