Zimra moves on VAT refunds backlog

NDAMU SANDU

The Zimbabwe Revenue Authority (Zimra) has paid nearly ZWL$700m in valueadded tax (VAT) refunds and the authority is verifying submissions by taxpayers as it moves to clear the backlog.

Last year, Finance minister Mthuli Ncube gave Zimra up to December 31 to clear VAT refunds amid revelations that companies were bleeding due to Zimra’s failure to refund them.

Zimra Head Corporate Communications Francis Chimanda told Business Times the tax collector paid out ZWL$679,660,970.09 in refunds as at December 31, 2019.

It owed ZWL$436,846,462.26 as at December 31 2019.

“Zimra had a target of clearing backlog for 2018 and prior VAT refunds and that was achieved.

However, some refunds for 2019 are still under verification as taxpayers are not submitting information on time,” Chimanda said.

There were fears that Zimra’s failure to pay the VAT refunds will erode the confidence taxpayers had in the authority and will result in noncompliance.

Executives say even in instances where the taxpayers repeatedly supplied the documents requested by Zimra to complete the verification, the refunds still delayed.

The delays come at a time when the local currency has been depreciating against the greenback.

Although the normal process for tax refunds is that it should be paid within 60 days, Zimra has been ignoring the regulations even though the failure attracts interest payment to the registered operator on the outstanding amount.

But Chimanda said the authority “does not fail to pay refunds when all required information is made available in time”.

He said businesses have complied with the new tax regime and reduced VAT to 14.5% from 15% effective last month.

There were reports that some companies were charging 15% on VAT in violation of the tax regime. “All companies who submitted their January 2020 VAT returns, which were due on 25th of February 2020, have complied,” Chimanda said.

He said Zimra would carry out taxpayer education through workshops, audits, and prosecution for those that fail to comply Zimra is owed over ZWL$4bn by companies in unpaid taxes as at December 31.

Mazani said Zimra has embarked on a number of recovery measures such as engagements with clients, follow up on payment plans, garnishee orders, client education, reminders and final demand of payment.

Government relies on tax revenue to operate.

However, compliance levels have been low at 30% of registered taxpayers as the bulk operates outside the tax net.

Zimra has recently become vicious pouncing on tax dodgers as it moves to collect revenue which is the lifeblood of government.

Government has embarked on tax reforms, such as the new tax management system, to boost collections.

This comes as a report by the Economic Commission for Africa recommended that tax reforms and improvement in non-tax revenue will extricate Zimbabwe from the debt trap.

In its flagship report released last year, ECA said Zimbabwe, alongside Chad, Mozambique, South Sudan and Sudan, are in debt distress.

Burundi, Cameroon, Cabo Verde, Central Africa Republic, Djibouti, Ethiopia, Ghana, Mauritania, São Tomé and Zambia have a high risk of debt distress.

The Economic Report on Africa 2019 said the common denominator facing the 16 African countries in debt distress or high risk of debt distress has been low government revenue with government revenue to GDP at below 20% in most countries including Sudan, Chad, Zimbabwe, Ghana, and Ethiopia.

“Those countries will remain in the debt trap unless something is done to raise revenue through tax reforms, non-tax revenue, enhanced tax administration and reduced tax evasion and avoidance particularly in the natural resources sector,” said the report themed, Fiscal Policy for Financing Sustainable Development in Africa.

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