Companies in $160m tax refund nightmare

PHILLIMON MHLANGA

Several local companies have been thrown into financial turmoil due to delays by the country’s tax collection agency, the Zimbabwe Revenue Authority (ZIMRA) in processing tax refunds amounting to about $160 million.

The situation is killing business as it is creating cash-flow problems for firms.

A number of executives told a KPMG International Financial Reporting Standards (IFRS) tax and business meeting held in the capital last week that the delay was frustrating businesses. Misheck Govha, head of technical services at ZIMRA told Business Times on the sidelines of the meeting that tax refunds backlog amounted to about $160 million.

“There has been a challenge in the processing of value added tax (VAT) refund in the last few months,” Govha said.

“I think in the last few months we have paid about $30 million but there is still about $160 million in VAT refund still sitting on our books.

It is our hopes that that we will be able to clear this backlog soon. Those who still have problems in getting genuine tax refunds should approach us, so that we can quicken the processing of refunds.”

Although the normal process for tax refunds state that it should take up to 60 days for a refund to be paid, companies executives who spoke to Business Times said they were facing delays of between six months and 12 months, a situation which has negatively impacted on cash flows.

Some indicated that whenever they lodge refunds papers, the tax authority, subject them to several audits from deferent departments from ZIMRA, a situation which has delayed the refund process.

They indicated that even in instances where the taxpayers repeatedly supplied the documents requested by ZIMRA to complete verification, refunds were still taking longer to be processed.

“The situation has deteriorated and it’s now an issue to get a refund from ZIMRA,” a Harare based business executive who preferred not to be named said.

Steve Matoushaya, a tax director with KPMG Zimbabwe Chartered Accountants, which advises several companies on tax matters, said the tax refund delays were indeed affecting companies.

“This is a serious issue (VAT refunds). ZIMRA used to process funds faster, but, now it takes so long to process refunds. This is actually affecting companies’ cash-flows,” Matoushaya said.

The worsening situation has caused enormous problems for businesses, especially in this economic environment, other tax experts said.

The major source of tax refunds is VAT under which registered operators can claim refunds from ZIMRA where input tax (the VAT that registered operator is charged on his or her purchases outweighs output tax (the VAT that the registered operator charges).

ZIMRA has sought to manage the refund bill by ensuring that all claims are genuine and accurate.

Section 50A of the VAT Act (Chapter 23:12) also empowers the ZIMRA Commissioner-general to appoint any registered operator who purchases goods from other registered operators to be a value added withholding tax agent, which ZIMRA did in April 2017.

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