Like all policy documents, national budgets are quite complex and most people don’t really ever get to read the whole thing. This leaves them at the mercy of social media and people like us. Usually, they only ever get to hear the bits that affect them in a profound way. In the latest budget presented yesterday, Mthuli Ncube introduced a presumptive tax of US$30 per month to be paid by tenants and collected on behalf of the government by landlords.
This sent social media into a frenzy as people fumed that the Finance Minister had introduced yet another tax on top of the already loathed 2% tax. “What is he trying to do, rob us to death,” people asked. The truth is that the tax is not what people think it is.
A number of enterprises operate from designated business premises where the landlords are either Local Authorities or private property owners such as the Gulf Complex and Kwame Nkrumah Mall, among others. Their place of business is, thus, comprised of partitioned units in commercial buildings.
. The fixed nature of the business, thus, presents an opportunity for the tax administration to improve tax collections from presumptive taxes. I, therefore, propose to introduce a presumptive tax of an equivalent of
Finance Minister Mthuli Ncube in the 2021 budget
US$30 per unit per month.
He also goes on to set presumptive taxes for:
- Bottle-stores and restaurants $10 000 ZWL
- Hairdressers $2 500 ZWL
- Cottage industry $10 000 ZWL
He is not talking about domestic landlords
The US$30 presumptive tax is not going to be applied to domestic tenants. It is a tax that people who operate informal businesses are going to pay. In fact, Mthuli Ncube is just proposing a new way to collect this tax and setting the amount of tax to be paid. The tax already exists but informal businesses were simply evading payment. Here the Finance MInister is introducing a new tax collection strategy that is meant to make sure that informal businesses pay presumptive tax. As always informal traders can always file their tax returns and pay the actual tax that they owe. Few if any will do this as they will probably end up paying more than US$30.
So unless you have a table at Gulf Complex or in some stall in town, you are not going to be paying this tax. If your domestic landlord asks you to pay this they are committing fraud as they probably won’t remit the money to the government.
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