The ManicaPost
Kudzanai Gerede Business Correspondent
Zimbabwe Revenue Authority (ZIMRA) says it is leaving no stone unturned in following up on the massive debts it is owed in unpaid taxes while it continues to develop new strategies of dealing with taxing complexities associated with a highly informal economy.
The authority has been missing revenue collection targets owing to a combination of a waning tax base and default by most companies who are facing operational challenges.
Last year ZIMRA missed its revenue targets by four percent recording collection amounting to US$3,462 billion against a target of US$ 3,607bilion. There was a 20 per cent corporate tax slump as a result of depressed profitability and defaults in tax payments.
The authority says it is currently owed US$ 2,5 billion in unpaid taxes since the start of dollarisation in 2009 and the figure does not include debts cancelled during the hyper-inflationary period.
The tax collector further stated that it was already engaging debtors to come up with payment plans to liquidate the debts which has seen fiscal coffers dwindling in recent years leading to Government’s current struggles in salary payments to civil servants on time.
Addressing journalists at a ZIMRA media workshop in Harare last week, ZIMRA acting Commissioner-Domestic Taxes, Miss Regina Chinamasa said the authority was having challenges with its debtor’s portfolio from which it hopes to recover about 20 percent of the total by year end.
She said ZIMRA intends to strike a balance between debt recoveries without liquidating company operations in the process as they are cognisant of the prevailing economic situation.
“The current debt owed to ZIMRA stands at US$ 2,5 billion. We aim to collect at least 20 percent of the amount by year end. However we try to avoid killing the goose that lays the eggs. We want to allow companies to operate so we try to create a balance in our debt recovery measures. We try to engage as much as possible so that companies continue to contribute to the fiscus,” she said.
Among major challenges the tax collector was facing was effective means to curb revenue leakages such as smuggling, tax evasion and use of undesignated crossing points along with other acts of economic malfeasance.
This comes at a time when prudent economic interventions by Government such as Statutory Instrument 64 of 2016 assumed limited effect as some products removed from the Open General License continue to be smuggled into the local market without ceding any amount in taxation and clearance.
Meanwhile acting Commissioner General Mr Happias Kuzvinzwa urged the local business community to be voluntarily tax compliant in order to avoid unnecessary business expenses which come in form of penalties while calling for business to desist from taking advantage of loop holes within the country tax regime.
“Base erosion and profit shifting which refers to tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no tax location is a major challenge facing the African continent.
“We therefore call for voluntary tax compliance and not play cat and mouse game with the authority,” he said while accentuating that ZIMRA was making progress in dealing with various tax avoidance antics.
He said the fiscalisation project, a real time automated tax system through fiscal devices was playing a key role in augmenting tax revenue particularly value-added-tax on local sales as business find it difficult to under-declare their sales.
Government has invested immensely in the fiscalisation project as a means to ensure transparency in the tax payments but there has been an outcry from the business community citing exorbitant charges by the authorised suppliers who are charging as much as US$ 1 700 for the devices.
In the 2017 National Budget presented last year, Finance and Economic Planning Minister Cde Patrick Chinamasa said Government was in the process of vetting suitable suppliers of the fiscal gadgets to ensure availability across the country.
The process is also meant to ensure affordability of the devices by contracting more suppliers following mandatory use of the machines not only from category C companies as initially declared but to other categories A, B and D.
ZIMRA has also embraced technological advances to meet its tax collection and detection efforts.
Following rampant reports on transit fraud by haulage transporters at the country’s border posts, the authority has installed a robust electronic cargo-tracking system in order to capture goods declared to be destined for the local market when they are actually in transit to neighbouring countries.
