FUNGAI CHIMWAMUROMBE & LEON GONA
The relationship between the taxpayer and the revenue authority is often viewed as one that is unduly biased towards the latter.
Our fiscal laws place the burden of proof upon the taxpayer to prove their compliance with them, moreover the importance of the revenue authority within the state apparatus is such that its operations and interface with the tax payer are much limited and shrouded in mystique, notwithstanding the revenue authority attempt to demystify its operations with its mantra “your partner in business”.
A result of this demeanor is that most taxpayers unduly bear the burden of restrictive, unfair or even unlawful interpretation and implementation of the fiscal laws.
Moreover, as with any body of laws, the development such areas are dependent upon litigants bringing issues/ laws under the scrutiny of the courts.
Unlike other areas of law, the revenue authority’s application of the fiscal laws often goes unchecked, albeit it is apparent such application is either of restrictive, unfair or even unlawful.
The advent of the new year has seen two decisions that emphasise the point that the taxpayer has a duty to challenge against restrictive, unfair or even unlawful fiscal laws of the interpretation thereof.
Sometime in 2021, the Special Court for Income Tax Appeal (which a specialised court within the High Court) entertained a matter where a taxpayer who had made a donation of US$400 000-00 to a charitable trust that was challenging the Revenue Authority disallowing deductions permissible upon donation to a charitable trust.
The revenue authority had adopted a restrictive interpretation of the phrase “a charitable trust administered by the Minister”.
The court adopted a purposive approach in defining the term and concluded the donation had been made to a charitable trust administered by the Minister.
Whereas the judgment had some interesting consequences on the jurisprudence on the law of trusts in Zimbabwe, it is important to note the bearing this matter will may have on matters or disputes along the same parameters.
The authors therefore opine that taxpayers are key actors in the development of a fair and rational fiscal regime; as such it is incumbent upon all taxpayers to challenge fiscal laws whose interpretation and subsequent application are restrictive, unfair or even unlawful.
In a similar vein; the High Court has also handed down judgement that the retrospective imposition of VAT on imported rice between 2016 to date was unlawful.
The court noted in its judgment that VAT is consumptive tax borne by the consumer, as such there was no reason place the burden at the port of entry and later upon purchase.
It is apparent that the taxpayer may not always be accurate in their computations or interpretation of the various fiscal laws to which they enforce.
In the event that a taxpayer is aggrieved by the revenue authority’s assessment there are internal mechanisms to which one can appeal to for the purposes of recourse.
This is usually escalated from the Regional Manager, to the relevant Commissioner and then to the Commissioner General.
In the event that a taxpayer is aggrieved by the Revenue Authority’s decision they have further recourse to the Special Court for Income Tax (for disputes emanating from the Income Tax Act) and the Fiscal Appeals Court (for disputes dealing with VAT, classification and customs related issues).
Notwithstanding the noting of an appeal with the fiscal courts, the said action does not suspend a tax obligation.
Whilst the Fiscal Appeals Court has its rules of court prescribed under the 12th Schedule of the Income Tax Act which covers amongst other things whom may appear within the court.
By contrast the Special Court for Income Tax has no prescribed rules and the processes in the said court are made through directions by the president of the Fiscal Court.
It follows that proceedings in the Special Court for Income Tax are informal and in some cases consultants have appeared on behalf of other taxpayers.
Therefore, it is imperative for that tax payers are cognisant that they have access to the courts for recourse against restrictive, unfair or even unlawful determinations of the Revenue Authority.
In conclusion, taxpayers are essential to the development of jurisprudence regarding fiscal laws. Moreover, the development of the said jurisprudence guards against restrictive, unfair or even unlawful determinations of the Revenue Authority.
In that premise the taxpayer must realise there are opportunities to seek recourse beyond their interaction with the revenue authority.
Fungai Chimwamurombe is a registered legal practitioner and Senior Partner at Chimwamurombe Legal Practice and can be contacted for feedback at fungai@zenaslegalpractice.com and WhatsApp 0772 997 889. Leon Gona is an Associate and can be contacted on leon@zenaslegalpractice.com
