Businesses face challenges in avoiding new taxes amid IMF programme, says Joe Jackson
Director of Operations at Dalex Finance, Joe Jackson, has said it is going to be difficult for businesses to avoid the new taxes implemented by the Government particularly under an IMF programme.
According to him, loopholes in tax revenue generation is being plugged by the government on a daily basis, hence the difficulty in businesses avoiding taxes particularly the Growth and Sustainability Levy that affects the gross profit of businesses.
“The new taxes being implemented by government are very difficult to avoid especially the Growth and Sustainability tax, loopholes in the tax system are being plugged daily,” he remarked answering a question on the likelihood of businesses wanting to avoid taxes given the high tax incidence on their operations, particularly amid a new IMF programme that seeks ramp up more revenue for Government through taxes.
Jackson made the assertion speaking during NorvanReports’ Twitter Space Conversation themed “Unpacking the IMF Approval and its Effects on the Economy”.
The new taxes which took effect on May 1, 2023, include the Excise Amendment Act, 2023, Income Tax Amendment Act, 2023, and the Growth and Sustainability Levy Act, 2023.
The Growth and Sustainability Levy ensures that banks, non-bank financial institutions, telecom companies, and firms working in the oil sector pay 5% of their profit before tax to the state. Mining firms, oil and gas companies are however expected to pay 1.0% of their gross production, while all other firms will pay 2.5% of their profit before tax to the GRA.
The Excise Duty Amendment Tax, the GRA noted has been expanded to cover some items and commodities that were previously not captured. The development may result in the prices of some processed fruit juice, cigar, mineral water, spirits, and wines, including sparkling wine, going up.
The Income Tax Amendment Tax is another key tax measure that has been revised. According to the GRA, the minimum tax rate for firms that will be declaring losses for five years will be 5%. Additionally, income earned beyond ¢500 will attract some taxes. Those earning an extra ¢100 will attract a tax rate of 5%, while ¢100 only will attract a rate of 10%.
The IMF programme according to several economic analysts, is revenue weighted rather than being expenditure weighted. Economists argue that, the IMF programme will increase the tax burden on citizens.
