Major relief for industry

LIVINGSTONE MARUFU

The country’s tax collector, Zimbabwe Revenue Authority (ZIMRA), has agreed to offset taxes owed by companies against amounts it owes them in VAT refunds,  a policy shift expected to ease liquidity pressures and unlock much-needed working capital across industries.

For years, companies had complained that ZIMRA demanded tax payments in fresh funds even while sitting on verified VAT refunds. The practice, businesses argued, crippled cash flows, undermined competitiveness, and slowed economic recovery efforts.

In a written response, ZIMRA confirmed that it has started clearing outstanding refunds through its new Tax and Revenue Management System (TaRMS), which automates the offsetting of verified VAT refunds against tax liabilities.

“The integrated Tax and Revenue Management System (TaRMS) is designed to facilitate an automatic set-off between verified, payable VAT refunds and any outstanding tax liabilities a client may have. This ensures a netting-off effect and provides a consolidated financial position between ZIMRA and the taxpayer. Some taxpayers utilise this facility such that where their refunds have been verified, they are set off against their current or future tax liabilities,” ZIMRA said.

The authority said TaRMS has significantly improved efficiency in managing refund and payment processes, reducing human error and enhancing transparency.

“We have moved from the old system which had created a VAT refunds backlog. Since 2024, we embarked on a programme to clear outstanding refunds, which we have significantly achieved by clearing the backlog. The situation has greatly improved, and we are left with some cases that are under audit. When refunds are being audited, the refund is suspended until the audit is finalised,” ZIMRA said.

ZIMRA added that it is enhancing the system to ensure that, in future, low-risk refunds are processed automatically without human intervention — a development expected to further streamline tax administration.

The announcement comes amid growing frustration from businesses that accused ZIMRA of aggressively enforcing US dollar tax obligations, instituting penalties and garnish orders while ignoring outstanding VAT refunds owed to companies.

Industry players estimate that ZIMRA owes firms more than ZWG3 bn in VAT refunds and arrears, a situation that has long burdened company balance sheets.

The private sector has welcomed the tax collector’s decision as a timely intervention to restore business confidence and improve liquidity.