An investigation on the appropriateness of prevailing presumptive tax rates in Zimbabwe.

Abstract

The research project was carried out to investigate on the appropriateness of the prevailing presumptive tax rates levied on informal sector as some informal firms are not paying presumptive tax. The researcher was enticed to study the prevailing presumptive tax rates as presumptive tax head has been under-performing which results in ZIMRA missing the presumptive tax target for the past five years except in 2014. Results of the study revealed out that the presumptive tax rates levied by the ministry of finance are inappropriate and should be revised downwards. Paying presumptive tax affects negatively the informal sector business hence the researcher recommended that presumptive tax rates be reviewed downwards in light of this plight. Results also showed that presumptive tax system is not taxing all the eligible informal sector operators. The research recommends that ZIMRA should enforce compliance on informal sector operators to pay presumptive tax as some informs firms are not paying tax The research has shown that informal sector participants are oblivious of how presumptive tax obligation is arrived at hence the involvement of these stakeholders will increase presumptive tax revenue.