TAURAI MANGUDHLA
The Zimbabwe Revenue Authority (Zimra) will crack whip on businesses that have not reduced value added tax (VAT) to 14.5% from 15% in compliance with the new tax regime, effectively fleecing customers.
A crunch board meeting was held in Harare yesterday to come up with measures on how Zimra would punish errant businesses.
The meeting also deliberated on the level of compliance, 22 days after the new VAT regime came into place following Finance Minister Mthuli Ncube’s November announcement in the 2020 National Budget.
Highly placed sources say Zimra has been sleeping on the wheels in respect of enforcement given that they stand not to benefit financially.
“If the VAT was increased, Zimra would be all over because it means they collect more money, but there is just no zeal among the ranks to run with this reduction,” said a close consultant who requested not to be named.
“After all, this reduction by 0.5 percentage points is merely academic as it will not result in reduced prices because VAT is just but a component of the final price of the product and reducing it by a small margin has no effect in an inflationary environment.”
The businesses that are yet to comply, Business Times has learnt have an option to retain the money on reconciliation, but it is almost impossible to refund individual customers especially those losing small amounts in retail transactions.
When the policy directive was announced in November, month on month inflation was 17.46% before shedding 0.91 percentage points to close December at 16.55%.
The implied year-on-year inflation rate in December stood at 512.1% as the local currency remains on a slippery slope.
Zimra stands accused of folding its hands while unsuspecting consumers are fleeced by retailers. Asked what the revenue collector has done to ensure compliance, Zimra through its PR office said the Finance Act was gazetted on December 31, 2019, as Finance Act No. (3) No. (13) of 2019 with an effective date of January 1, 2020.
Zimra said an article on new fiscal proposals were published in the local media on November 21 notifying clients of the new fiscal measures as announced by the Finance Minister in the 2020 budget statement including the reduction of VAT from 15 percent to 14.5%.
“In addition workshops have been held with clients throughout the country and more workshops are lined up in all the regions,” said Zimra in emailed responses to Business Times.
“This has been a welcome development to most businesses and individual clients.
Also, a public notice was sent through the press and this can be found on our website,” added the tax collector.
Business Times is reliably informed some fiscal devices cannot be reconfigured to comply with the 14.5% VAT.
Zimra said there are “a few devices pertaining to a specific manufacturer that need reconfiguration and the approved suppliers have communicated with their manufacturers for rectification”.
As Zimra ponders on ensuring compliance, consumers are still losing their hard-earned cash, more than three weeks after the tax was reduced.
