On the 25th of November, the Minister of Finance, Dr Mthuli Ncube released the national budget for 2022. There weren’t many surprises and it all read like we expected. As a result, this budget did not attract much conversation and didn’t even trend on Twitter. However, one little snippet of a new tax did manage to make the rounds.
600. Mr Speaker Sir, whereas 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.601. 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.602. However, 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.
When the minister was presenting his budget, the full 2022 budget was embargoed until after he was done with his presentation. The document we got after the lifting of the embargo was not the whole document but now we have the full thing.
Now that we have the full thing, we have to discuss paragraphs 600 through 602. Three short paragraphs that have caused so much rage.
Paragraph 600: 25% duty is modest?
Give governments a millimetre and they take a kilometre. The Finance Ministry under Mthuli Ncube is innovative when it comes to finding new ways to tax us. Now we hear the man himself say the 25% duty on phones is ‘modest.’ Modest? Meaning it’s too little for him. This man believes in taxing us to death.
What angers me personally is that in practice, it’s not even 25%. It’s more like 40%, as for other goods. I should know, I paid the 40% earlier this year. Is it any wonder people are concealing their phones to avoid paying this exorbitant tax?
He’s going to make me sound like an old man reminiscing about the good old days but I can’t help thinking back to the GNU years when tax on electronics was scrapped entirely. That’s when the ‘decent mobile phone penetration’ we have really kicked in. That’s when most Zimbos dabbled with smartphones for the first time as devices became accessible. Our mobile phone penetration shot up as a result.
Where would e-commerce be? All our WhatsApp and Facebook group traders would have fewer customers to serve. Where would mobile money be? How would banks have gone paperless when customers didn’t have the devices to use mobile banking services?
I guess we shouldn’t be surprised anymore that Mthuli Ncube is aggresive when it comes to his tax regime. The 2% IMTT is proof he doesn’t mind unfairly, harshly taxing us, as long as he can boast that we exceeded our revenue targets.
Captains of industry decried that it would be a double taxation and would have the effect of inflating cost of goods. In turn, inflating the prices the end users pay. Mthuli responded that the tax had turned perennial budget deficits into surpluses and so would stay. So it’s clear that for him, it’s budget surpluses at any cost.
Paragraph 601: US$50 tax on every new phone
Now this is the real shocker. Before even looking at what that entails, the fact that this is where the minds at the finance ministry drifted to says volumes. One colleague used the adjective ‘evil’ when talking about this move. I’m inclined to agree that it is a rather appropriate descriptor.
We just talked about the ridiculous 2% IMTT. Well, compared to the $50 duty, the 2% is the most reasonable tax in the world. The $50 does not take into account the price of the phone being registered. You could buy a $50 phone and the government would still want it’s $50 cut making for a 100% tax. If you got a bargain for a budget android phone for less than $50, you would pay more in tax than you did for the phone. Ridiculous.
One wonders if they thought this through.
The wording in the budget does not make it clear how this would all work in practice. I imagine it would just be that mobile network operators will have to prevent devices that haven’t been used on their network before from working. Econet, NetOne and Telecel can tell which device you are using and so it shouldn’t be hard to comply with the new directive.
When you insert an Econet SIM card in your phone, the phone has to communicate with them so that they know which bands it supports, whether it supports 3G, 4G or 5G and serve it accordingly. They can get the IMEI, serial number and device manufacturer this way. So, they could just maintain a database of the devices on their network, something they probably already do.
What this means is that when a device that has never been on their network is detected, they simply withhold service until the user proves they paid duty for the device. For this to work, the mobile network operators would have to share device information in a central database. This is so that if it’s just a case of the user switching sim cards, the user is not denied service.
Paragraph 602 would be moot.
Therefore the bit about ZIMRA refunding people their US$50 would not be necessary. Only those that cannot prove that they paid duty would pay. However, in theory we could have people who pay the $50 just to get service before locating the documentation proving they paid duty.
As to the legality of this business of working with the assumption that a device was smuggled, I don’t see any hurdles there. It’s perfectly fine for them to say we will assume you are a smuggler and charge you $50 which we will refund you once you prove you paid duty. That’s essentially how withholding tax works, you are charged tax that you can be reimbursed if you prove you are in right standing with the taxman.
The question on my mind is whether we are going to ignore all devices currently in use. Are we all going to have to prove that the devices we are using right now came in to the country legally? Could we all be booted out by the MNOs until we visited the nearest carrier shops with customs duty documentation for our 5 year old phones? Or maybe our account balances are deducted with US$50 worth of airtime instead? It sounds ridiculous but with Mthuli, it’s not beyond the realm of possibility.
More revenue enhancing measures
The paragraphs we talked about above fall under the heading, ‘Revenue Enhancing Measures.’ There are other measures under that heading and you are not going to like most of them.
- Duty on cigarettes – up from 20% + US$5.00/1000 cigarettes to 25% + US$5.00/1000 cigarettes [Okay, you might not care about this one, depending on the business you’re in.]
- Energy drinks duty – all you Red Bull, Monster and Dragon drinkers brace for an increase in prices. Mthuli wants US$0.05/ litre of energy drink entering the hallowed madzimbahwe lands.
- Withholding tax – up from 10% to a whopping 30%. This is a big one and Mthuli knows it. He says the 10% is too low and isn’t inducing compliance. I believe the 30% will induce compliance, you all better get your business’ affairs with the taxman in order and get your tax clearance.
- Motor vehicle insurance pool – short-term insurance providers have something to be mad about too. When foreign cars enter Zimbabwe they are forced to get temporary insurance and apparently very few end up claiming anything. The pool is distributed to the insurers but now 20% of the redistribution will go to the govt to be used to assist victims of accidents.
And that’s it. The govt is serious about it’s tax revenue and we better get used to it. Never you mind about the effects the high taxation could have on the struggling individuals and businesses in the economy. The govt knows best how to redistribute that tax revenue to champion economic growth.
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70 comments
To borrow an often memed quote “Why are we still here? Just to suffer?”. Truly and sincerely, from the bottom of my heart, Eff this tax, the minds that conceived it and the 2021 land cruisers they rode in on!
😂😂😂 I can see the Land Cruiser in my mind. Different worlds, same country.
These people are living large and we’re paying for it all
You can imagine how many years in a hotel
BTW, what does it say about a country when energy drinks have become a such a massive crutch to the people that gov sees fit to single them out for an extra tax!
If there are tax dollars to be made, you best believe our govt is coming in.
Its not sanctions, its Corruption, and STUPIDITY. What right-minded investor would partake in the hallowed Zimbabwe pie when everything has to be so expensive? This is not counting the political s***tery and the everpresent economic mess.
Vana kumaBlesser (teen pregnancies and whatnot), smuggling, robberies on the rise etc… but (unsurprisingly) all they can think of is make more money. Nxaa.
This is what they call ukuhlanya in isiNdebele.
Mthuli should know.
The cycle is a depressing one. Govt collects revenue➡️Revenue is not enough ➡️ Govt increases taxes➡️ Businesses and individuals struggle ➡️Lower profits and therefore taxes ➡️ Revenue is not enough… And again we go.
Eric Bloch pointed this out, decades back, in one of his articles in the Financial Gazette, asking if govt had gone mad. They’ve proven his point over the decades, and are only too eager to keep doing so. That time, it was when they bumped up sales tax / vat, but didn’t think, (not that zpf are capable of doing so), about the Law of Diminishing Returns. Greed and stupidity are the only things zpf are not short of, but hopefully this bit can be voted / watered down, when the budget is presented. Some MP’s might make the effort, but it remains to be seen. Even they must realise their constituents won’t be overjoyed by this proposal…
Typical ZPF greed! It’s nothing more, or less, than that! Still, enough people have been stupid enough to keep zpf in, so that’s their lookout! ZPF are notorious for it, yet there are still enough people stupid enough to keep them in power. One of the may reasons I’m leaving asap! Had enough of zpf greed, and vote rigging, along with blatant voter stupidity, and greedy idiots, hell-bent on keeping their “mercs ‘n perks” status! You have what you’ve voted for, not just this time either! The only avenue available here, it would seem, is to get your MPS to vote it down! Good luck with that one!
You did not like this one bit, I see. You’re not alone.
100% Leonard! Will have a great front-row seat to it as well… The right-hand seat of a DC-8 cargo flight! I have to make the rather tough choice once on board and ready to go though… Do I want the take-off, or the landing? Can’t have both unfortunately and am not sure which one will be most satisfying at the moment… Decisions, decisions…
At least you are in a position to make a decision. For the majority, wherever the plane goes, they go. Stuck in this little teapot of ours.
What if u got ur phone on duty-free allowance, now u need the customs officer to give u something official to declare ur phones so you can claim your duty free allowance for purposes of registering your phone
You better get that documentation or Mthuli will want his half-Benjamin.
We continue to smuggle them why
Vachida kutanha dzavasinga svikiri
Zvino ndezvekwavo izvo
They are counting on that. They know they can’t stop people from smuggling them in. They want to make sure that once they are in, you can’t use them on any network in Zimbabwe usina kuvapa ka something something. It’s easy for them to do this.
I wish they would use this same technology to help us patinobirwa maphone edu. Vongoiblokawo if reported missing manje eh kana zvisingavaitise mari havanei nazvo
Even if you smuggler them they will not register on network….please read the article again to fully understand how it works….
Aaaargh
Aaaargh indeed.
Is that u holding that 50 bucks Leonard ?
😂😂😂 Gotta set the 50 aside before the shenanigans start. Jk, that’s not me. There’s no $50 note in my wallet at the moment, just 💯s. 😆😆
Kkk so ma tourists nema diaspora pavanouya muzim they have to pay $50 duty here 😂 since their phones will be registered on Zim network for the first time 😂😂😂
I don’t think they have thought it through yet but yeah, just like it is with temporary vehicle insurance, they will have to pony up.
I don’t think that’s how it would go down though. I think they would have to declare their phones and once their tourist status is shared with the MNOs, they will be able to get service. They won’t pay but border officials won’t be celebrating this added work.
They’re too busy trying to get their grubby scratchers onto as much forex as they can, and then only to line their own bank accounts!
Imagine facing a border officials after he has had to deal with those tourists.
The fat lady sings 💃💃💃 They have thought this through seeing that they don’t have anything that they add value in this country so as to get an income why not put the load on the citizens (It’s a blessing to be born in Zimbabwe). The only country where the people takes care of their government, what an honor it is to be such a percuilar people 🤪🤪🤪
Dang it, you’re right. This kind of thing is the only move they have. We are not unique in having an inefficient govt which taxes like a pro. However, we do have unique ways of taxing, truly innovative.
Shows you what thieves zpf are! Still, that’s what most of you have voted for over the years, and chamisa helped keep in place, after bleating about not being allocated a seat!
The citizens are milked relentlessly. God in heaven 🤣!
We need to get rid of these callous, incompetent group of thieving thieves. Cognoscenti of day light robbery.
Not gonna happen. Better get used to it.
Hundreds, Scorched Earth! Problem though… There needs to be enough people prepared to do this, and certain stupid, greedy sods, hell-bent on keeping their single seat and all its perks intact, need to be ignored, with the contempt they deserve!
And that’s where fear and greed come in. Most will be too scared. Of the few that are not scared, some can be bought (greed). If I were a betting man, I wouldn’t bet on this happening.
Number 4….. After all as soon as the foreign car left Zimbabwe the money was pure profit for insurers. So instead of fixing such an obvious scam, our “OPEN FOR BUSINESS” govt says we taking a 20% cut.
It’s all done with the noblest of reasons given. “The 20% won’t go into the consolidated revenue but will be used to help accident victims.” Makes you seem like the unreasonable one for protesting.
They need to refine that system either way. What about vistors or second hand phones?I mean you are out ffom Zim for 3 monthsand buy a phone and use it for 3 months or 6 months but must pay duty or what?
Maybe you’ll have to provide proof that you bought the phone months before reaching the Zim border. With no receipt, there’s no way to tell whether you aren’t lying. Unless we then contact the MNOs from the country you’re coming from.
There’s a lot we just don’t know about how they will enforce this in practice. It’s ridiculous.
Next is $12pa oxygen tax for every living being in th country.
Leonard customs duty is 25% and VAT is 15%, so they just do a 40% flat rate for individuals
Hence my indignation. In practice it’s not like you pay 25% and that’s it. No. You also pay 15% VAT. Customs duty vs VAT is semantics in the end. They are both taxes you pay to the govt. So, for him to say 25% is modest is insulting. Nobody is paying 25, it’s 40% of the value of the phone going to the govt.
Yes it’s 40% going to the govt, but the difference comes when it’s goods imported for personal use and for resale. For example if an individual imports a phone for $600 then he/she will pay taxes at a flat rate of 40% which is $240, it’s different if you’re to pay customs duty + vat, you will have to pay 25% customs duty, e.g. the total value of your phones is $600, you have to pay $150 customs duty then that 150 will be added to the 600 to determine vat payable i.e 15% of 750 = 112.5 then total payable will be 150+112.5= 262.5. above all VAT and customs duty are two different things. So when he said 25% he was referring to customs duty only
I hear you: the effective total rate when it’s for personal use is 40%
The effective rate when it’s for resale is 43.75%
My point though is that, although customs duty and VAT are different in the eyes of the taxman, they are practically the same thing for the people paying the tax.
Technically, some of the 40% you pay is put in a pocket called VAT and the other in CUSTOMS. To the paying importer, it’s still $240 (as in your example) leaving the pocket.
So, him saying 25% is modest as if it’s the only tax we pay is not okay. The 25% has friends and they can’t be ignored.
As a journalist you don’t have to think in layman terms, there are many different types of tax and they differ from product to product and certain conditions. VAT is payable even if you’re not importing. So as your job is to inform the general public you should actually put clarity perception on that
It’s simply more LEGALISED THEFT!
Please don’t give ’em ideas, Rex! Remember when Harare Council wanted to tax residents going to work in Harare CBD? This was to “broaden their revenue base”, translation: Rip off residents! It’s nothing more than theft of working people, just so those greedy sods have a comfy lifestyle. None of that will benefit Zimbabwe in ANY way whatsoever. Simple, unadulterated GREED is all that’s behind it…
Instead of streamlining the expenditure side of the account, the goal is always ‘broadening revenue base.’ All so they can misuse that broad revenue base. Harare City Council actually thought they could get away with that scam.
LOL! Please don’t give these crooks any more ideas, Rex! Their greed is already over the top.
How did they even arrive at the $50 figure??
Wadhafak
Sorry for asking , I am asking for clarity from my fellow countrymen, where does the government get it’s revenue from? I thank you.
Why does Mthuli hate poor people so much? ED is silent because this means more money for his useless trips and expendures
It’s simple, no frills greed! All zpf are capable of…
Will smuggle them and use Wifi from a mifi 🤭🤭🤭
😆😆😆 clapback
Buy kambudzi kako ke$10 they pay duty ye$50😂😂😂😂😂😂😂😂😂
Interesting discussion and some profound notes to note. The power must lie with the people! Every citizen has a right to participate in these decisions through consultative forums. How did we get to them and us. It’s darkly, twisted and…damn
If enough voters had bothered to vote, polling agents from all parties had done their job during the counting, and idiots like chamisa had kept their stupid, greedy mouths shut, things could well have been different. I don’t care anymore anyway… Have a way out, where I get paid to leave, so have taken up the offer! It’ll be great to arrive at Stansted, be met by my daughter, get driven home, then crack a few cold ones to celebrate finally being rid of destructive, greedy zpf and equally greedy stupids like chamisa! He’s managed to keep his merc ‘n perks, so doesn’t give a damn about anything or anyone else, just like zpf!
Come 2023 moda kuvhoterwa, Nxah mhani
Agh guys let’s look sharp before we blame devil 👿😈,this is too much, Zimbabwe
going crazy 🤣😧
All i know is that Zimbabwe authorities are a bunch of old educated fools
😃
Old, yes, Educated, ? Will leave that mark against them, as I don’t know for certain and have my doubts. Fools? No! Greedy, destructive idiots? Oh yes, much like those who keep voting them back in…
Prof Dofo, who ran a bank to the ground, will never impress me in anything he says, does or thinks. DOFO
It’s simple, unadulterated THEFT and GREED! Typical of zpf though.
Here’s an idea! If your MP is supposed to “represent” you in parliament, get them to vote this down! They are, after all, supposed to represent those who elected them…. I know, I know, it sounds fantasy, but at least try! Get those sods to do what they’re supposed to do: represent their constituencies, not fall asleep on a bench, after a rather hearty, liquid lunch…
Using taxes as low-hanging fruit to bolster the fiscus is counterproductive
….and if the service provider gets paid the $50 by a loyal taxpayer and deliberately decides to not pay or delays paying the tax money yo Zimra what strategy has been put in place to help the consumer gets their money back in time, I doubt if that has been considered.
Hi. I have a question. Does this mean if I want to ship a phone from overseas to ZImbabwe through one of the couriers I must pay $50 when collecting the phone or when it is being delivered ?