The Zimbabwe Revenue Authority (ZIMRA) is working on legislation which will help the tax collection agency reconcile recent tax amnesty transactions amid revelations that business is losing millions in penalties and interest despite making payments, Business Times can
Last year, ZIMRA embarked on a tax amnesty to encourage tax evaders to come forward and volunteer disclosure of omitted income and other tax compliance obligations in exchange for reliefs on penalties and prosecution.
The amnesty expired at the end of the last year.
However, the authority is failing to adjust amnesty transactions after payments have been made.
Tanganda Tea Company FD Henry Nemaire told a tax business meeting organised by Deloitte that the failure to adjust amnesty transactions had an “adverse effects on companies”. “This is costing businesses millions of dollars,” Nemaire said last week.
ZIMRA’s commissioner for domestic taxes, Rameck Masaire, admitted the amnesty transactions issue was a big problem.
“We acknowledge there is a big problem,” Masaire said.
“We are looking into the issue and we are in the process of introducing a new legislation. I think there was a gap. By the end of this month, we will come back to the market and update on the amnesty matter.”
ZIMRA is owed in excess of ZWL$4bn in unpaid taxes by thousands of companies as the tough economic conditions has resulted in several firms failing to meet tax obligations.
Last year, it embarked on a tax amnesty to encourage tax evaders to come forward and volunteer disclosure of omitted income and other tax compliance obligations in exchange for reliefs on penalties and prosecution.
The grace period for tax dodgers presented an opportunity for all businesses or persons to disclose incomplete or unreported tax and clear outstanding debts owed to ZIMRA.
According to official data from ZIMRA, more than 70 percent of the country’s registered taxpayers are not tax compliant despite the recent government sanctioned moratorium.
This has resulted in ZIMRA intensifying efforts to collect more revenue from tax dodgers by applying several measures such as garnishee orders, chasing third parties such as taxpayers’ debtors and gaining access into all regulatory authorities’ database to get names
and trading data.
Regulatory bodies are now submitting names of their newly registered clients to the tax collection agency. ZIMRA would then make follow-ups on these clients.
Government is heavily reliant on tax collections due to lack of budgetary support from the donor community. Growth in the informal sector has also meant that many businesses operate outside the tax collectors’ radar.
Also, many companies have closed and many more continue to scale down operations due to operational challenges, reducing the tax base.
ZIMRA also disclosed that the tax collecting agency was concluding the implementation of its fiscalisation programme, which it started in 2010. Masaire said ZIMRA was on stage three of the project.
Fiscalisation is aimed at minimising revenue leakages in retail sales and compels all registered operators to acquire, install and connect the fiscal gadgets to the ZIMRA server to facilitate real-time monitoring of transactions.
“We are moving to stage three of the fiscalisation programme in terms of structuring, developing a software that will be deployed to business. Now, we have a clear strategy on how we can deal with that,” Masaire said.