The planned use of gross revenue to net companies reporting losses but avoid paying taxes is likely to be punitive for law-abiding citizens. A majority of businesses engage in buying and selling, which means a large component of gross revenue is meant to recoup input costs. Costs may, on average, constitute 85-95 per cent of gross revenues for lucrative ventures and probably more for struggling businesses. The one per cent of gross revenue for the fisherman, or any other business, may translate to a corporate tax rate of over 40-50 per cent on net profits since both costs and margins are arbitrarily taxed. Gross revenue taxation formulas do not factor legacy costs such as start-up, investment, depreciation and future asset replacement costs, which are amortised over a period of time.

Source: Daily Nation July 17, 2020 08:03 UTC