PHILLIMON MHLANGA
Tax experts have warned that the recent monetary and fiscal policies announced by the Reserve Bank of Zimbabwe (RBZ) and the Ministry of Finance, have spelled a tough and bad year ahead for tax payers in Zimbabwe.
Experts who spoke to Business Times on the sidelines of the Institute of Chartered Accountants of Zimbabwe (ICAZ) tax meeting held in the capital last week said there were serious conflicts between the SI and tax legislation which is the Finance Act, leading to serious confusion for tax payers.
This week, tax experts also highlighted that quite concerning also was the confusion which has been exacerbated by the latest Statutory instrument (SI) 142 of 2019 gazetted by the Minister of Finance Mthuli Ncube on Monday this week, which further complicates the situation for taxpayers.
A tax director at BDO Chartered Accountants Zimbabwe, Maxwell Ngorima said: “The introduction of SI 33 of 2019 resulted in uncertainties in the application of tax legislation. Figures generated by fiscal machines are totally different from those in VAT returns where there are transactions in, for example, invoicing and payment received in RTGS and vice versa. Also, ZIMRA’S ASYCUDA has not been configured to take duty in RTGS. Entries are being done manually resulting in cumbersome clearance procedure.”
Ngorima suggested: “We recommend the introduction of a transition along the lines of General Notice 276 of 2010. This should cover the current loopholes in our legislation and also address issues relating to tax losses brought forward, capital gains allowances, tax credits, exemptions etc.”
Commenting of the latest SI 142 of 2019 which outlawed foreign currencies as legal tender, Ngorima said: “Section 4 of the Finance Act which requires taxes to be paid in foreign currency now conflicts with the new legislation, ” he said.
Another tax expert Simon Gwenzi, an advisor at TMG Consultancy highlighted that there were serious complexities as far as VAT compliance in Zimbabwe is concerned.
“Simplicity of legislation and administration are two determinants of compliance levels,”Gwenzi said.
“Simplicity of legislation relates to the interpretation of statutes, it should be easy to interpret returns. But, in our case, Zimbabwe’s legislation is complicated. Also in Zimbabwe, administratively, tax payers are required to submit generally 12 or more returns per annum. There are also conflicts in the manner in which a tax challenge is paid. One is also required to check the interbank rate daily. At the moment there are no rates at the ZIMRA website, which should be the official reference point for tax payers. So, there is no certainty of sources of interbank rates because ZIMRA is failing to publish that on its website.
Gwenzi added: “There is conflict of Section 15 which relates to calculation of tax payable considering output tax and input tax which leads to tax payable or refund and Section 38(4A), which relates to the manner in which tax shall be paid,” he said.
Gwenzi added: “The main challenges with the SI relate to its alignment with tax legislation.
“”The Finance Act stipulates that when one receives income in foreign currency, one had to pay tax in the same currency. Some future receipts will apply to past invoices and contracts in foreign currency. How will tax be paid in such situations?
“There would be need for transitional guidelines from nothing the RBZ and ZIMRA to help people comply with the new law without having to guess,” he added.
KPMG Chartered Accountants Zimbabwe tax director, Steve Matoushaya said: “There are lots of grey areas in the tax arena. Tax should be certain but it’s not at the moment. ZIMRA accounts are still in shambles and they are struggling to deal with amnesty transactions, making it difficult for taxpayers and it’s confusion them.”
Marvel’s Tapera, managing partner at Tax Matrix agreed with other tax experts: “This has been a difficult year and will continue to be a difficult year for tax payers because of the conflict between the tax legislation and SIs issued,” he added.
