Tax compliance and informal sector: Case of Glenview, Harare

Author

Zuvalinyenga, Alice

Title

Tax compliance and informal sector: Case of Glenview, Harare

Abstract

Informal sector is growing rapidly in Zimbabwe due to the shrinking formal sector. The expansion of informal sector and shrinking formal sector reduces tax base hence low revenues since most of the informal sector players are out of the tax net. In trying to increase the tax base, government introduces various methods of collecting tax from the informal sector and presumptive tax is one of the methods implemented in Zimbabwe. Although presumptive tax and other measures were introduced, there is still poor performance in the informal sector in terms of tax compliance. The study looked at the reasons behind tax non-compliance in the informal sector, challenges encountered by the informal traders when complying with tax regulations, challenges faced by revenue authorities when collecting taxes from the informal sector and lastly the measures which can be put in place so as to improve voluntary tax compliance. The results from the findings suggests that revenue authorities must engage in two-way communication with the informal sector before establishment of statutes, continuous offering of education, measures which eliminate or reduce corruption in the tax system, simplified tax systems and fewer tax heads will improve voluntary tax compliance hence revenue collections.

Date

June 2023

Publisher

BUSE

Keywords

Tax compliance

Informal sector

Supervisor

Mrs Masukume (Mutero)