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.