THE Finance and Economic Development minister Mthuli Ncube has come under fire for exempting Huawei from paying tax, with legislators saying it’s against the principles of good public finance management.
Ncube exempted the Chinese telecommunications giant from paying tax under Statutory Instrument 25 of 2020 recently.
MDC Member of Parliament for Mabvuku-Tafara James Chidhakwa told a recent National Assembly sitting that Ncube’s move was against the supreme law of the country.
“Can the minister share with this House why he introduced a Statutory Instrument exempting Huawei Technology from paying income tax? Is it not that such a move is contrary to the principles of good public finance management as codified in Section 298 of the Constitution which clearly states that the burden of taxation must be shared fairly?” Chidhakwa said.
At the same time, MDC vice president and Harare East MP Tendai Biti demanded that Ncube should explain the legal basis under which he gave the retrospective tax exemption.
“The Income Tax Act allows the minister to give tax exemptions, the problem he has with this particular transaction is that the law does not give him power to give a tax exemption that applies retrospectively. What is the legal basis that he has given away a retrospective tax exemption?” Biti questioned.
This comes after the Zimbabwe Coalition on Debt and Development (Zimcodd) has also complained that the government’s income tax exemption was not in the spirit of tax justice, constitutionalism, and progressive taxation in Zimbabwe.
“It is, therefore, worrisome that the government has decided to give the foreign monopoly tax exemption backdating 11 years ago when the same government is milking the ordinary citizen through the unpopular and unjust two percent Intermediated Money Transfer Tax saying the projects that Huawei and other Chinese companies were implementing were covered by an agreement between the governments of Zimbabwe and China.
“In those agreements, it is quite clear that the companies that are implementing projects covered by that agreement ought to be exempted from tax. So, there has been unequal treatment.
“If you look at Jiangsu which is upgrading Robert Gabriel Mugabe International Airport and they also upgraded Victoria Falls — they are already enjoying the tax exemption status which was given to them quite a while ago while Huawei was not at par with them,” Ncube said.