The Zimbabwe Coalition on Debt and Development (Zimcodd) has raised alarm over government’s preferential treatment of Chinese mobile technology giant, Huawei, after cabinet backdated the company’s tax exemption to 2009 robbing the economy of millions in levies.
Zimcodd says it is regrettable that government has updated Statutory Instrument 25 of 2020 exempting Chinese Huawei Technologies from paying income tax.
The debt watchdog says the burden of tax must be shared fairly and that it is “worrisome that government has the foreign monopoly tax exemption backdating 11 years ago.”
“When the same government is milking the ordinary citizen through the unpopular and unjust 2% Intermediated Money Transfer Tax, among a host of other retrogressive taxes,” Zimcodd said in a statement.
Zimbabwe has been struggling to raise money for domestic needs as companies continue to downscale in the wake of economic challenges. Observers believe that taxing foreign conglomerates like Huawei will provide the much-needed liquidity.
“Instead of exempting Huawei Technologies from paying income tax, the government should be more concerned with how its domestic resource mobilisation can be further enhanced by taxing rich companies so that the welfare and developmental interest of the poor who are already reeling under the heavy burden of taxation are met,” reads the statement.
Government, in 2019 introduced a 2% tax on all mobile money transfers in a bid to boost dwindling government coffers. Although the move received widespread criticism, government has not reneged on its decision.
“ZIMCODD is concerned that by instituting preferential treatment on Huawei Technologies, the Minister of Finance is violating the principle of comparative treatment among economic players/investors at the same time setting a bad precedence for other wouldbe investors as there is high likelihood that more investors will claim equal treatment,” Zimcodd says adding that government must repeal the Statutory Instrument and subject the process to parliament.
The government of Zimbabwe has also come under scrutiny for bypassing parliament, which is constitutionally mandated to craft law.
About 311, Statutory Instruments have been passed by cabinet without the blessing of parliament, which provides the watchdog role.