Only 23% file for PAYE in Q1 says ZIMRA

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Philimon Mhlanga

HARARE – The Zimbabwe Revenue Authority (ZIMRA) says tax compliance levels remain low at 23 percent and 39 percent for pay as you earn and value added tax respectively

ZIMRA commissioner general, Faith Mazani, who spoke at the ZIMRA-Parliamentarians meeting, held in the capital Wednesday, attributed the low levels of compliance to high levels of corruption, negative perceptions by tax payers and lengthy prosecutions.

“General compliance levels are very low in terms of payments, remittances and submissions of required returns,” Mazani said.

“Of the 511 059 returns expected in the first quarter of 2018, filing compliance levels stood at 23 percent and 39 percent for pay as you earn and value added tax respectively.

“The reasons for low compliance include corruption, negative perceptions by taxpayers and lengthy prosecutions.

“The sad story is that our tax burden ends up being borne by a few businesses and employees who cannot escape the tax, thus giving an impression that our taxes are too high. With higher compliance, the burden can be shared and taxes reduced, once we manage to close the fiscal gap and break even with our government expenditure budget.”

Travellers and transport companies endure long periods of waiting at the country’s border posts, sometimes over 24 hours before clearance, a situation which has stimulated a vibrant underground system that usually benefits the ZIMRA officers rather than the State.

People pay through the back door to either evade the high customs duty or to fast track their travel.

The rampant corruption, mostly blamed on ZIMRA officials at points of entry, has hit hard on the revenue collection body’s capacity to deliver.

The situation has also been worsened by employment statistics, which paint a grim picture for tax compliance level.

Zimbabwe’s economy has become largely informal, making it difficult for ZIMRA to collect taxes.

Many companies have closed and many more continue to shut down due to operational challenges, reducing the tax base.

Zimbabwe’s unemployment rate is estimated to be more than 90 percent, meaning t less than 10 percent of eligible individuals’ taxpayers are paying tax.

The tax collector has intensified efforts to collect more revenue by enforcing several measures. Recently, ZIMRA announced plans to intensify tax audits going as far back as six years.

It has also heightened efforts to force companies to fiscalise, a move which is expected to assist in curbing transit fraud, smuggling and illegal dumping of goods on the Zimbabwe market.

Last year, ZIMRA, also entered into an agreement with all regulatory authorities in the country to gain access into their databases.
The synergy entails regulatory bodies submitting names of their newly registered clients to the tax collection agency. ZIMRA would then make follow ups on these clients.