Zimbabwe’s high tax evasion rate is causing headaches for President Emmerson Mnangagwa’s government with the extent of tax dodging costing the administration billions of dollars in lost revenue, a Treasury official has said.
Finance and Economic Development deputy minister, Clemence Chiduwa, said the rate of evasion through organised criminal syndicates was one of the biggest economic headaches for government as it is prejudicing the administration, which is battling to meet its financial obligations. The evasion, Chiduwa, said was also complicating the country’s tax collector, the Zimbabwe Revenue Authority (ZIMRA)’s revenue collection efforts.
“As government, we are extremely concerned with high levels of tax evasion,” Chiduwa said.
He added: “If we don’t pay taxes, our budget deficit will grow exponentially. We also need to foster growth and fund government programmes such as social and infrastructure development. We are designing a compliance system to encourage tax payers to pay.”
ZIMRA commissioner general, Faith Mazani, said the tax collector has planned a crackdown on tax evaders.
She also called for a collaborative effort to fight the scourge of corruption and tax evasion.
“Our tax systems and revenue efforts have been complicated by the levels of tax evasion and smuggling of goods in and out of the country, thus depriving government of the much needed revenue for development,” Mazani said.
The compliance level, Mazani said was below 30% of registered tax payers with the majority of them finding illegal ways to operate outside the tax net. Non-compliance is negatively impacting on service delivery, with roads, hospitals and other infrastructures bearing the brunt.
She said, ZIMRA was working round the clock to bring those activities into the net in order to share the tax burden across all tax payers.
“ZIMRA is building its capacity to take advantage of available data sources for its compliance management through the use of third party information for tax registration, verification and audit.
“Some businesses conduct their businesses in foreign currency. Taxpayers need to know that the law still requires them to report in their tax affairs in foreign currency, even if they are doing it illegally,” Mazani said.