By Prosper Ndlovu
The Zimbabwe Revenue Authority (Zimra) has discovered massive tax dodging in the private sector, with a staggering 80 percent of the firms owing up to $4,2 billion as of March 2018. This has humstrung Government in its efforts to fund public sector programmes.
Private sector representatives yesterday however, disputed the figure.
Instead, they accused the tax administration of miscalculating their dues, interests and penalties since dollarisation in 2009, and demanded sincere dialogue to resolve the matter.
Fierce debate ensued around the matter during a Zimra breakfast conference here yesterday as parties sought common ground and later resolved to amicably iron out their differences.
In her remarks during the meeting, Zimra’s newly-appointed Commissioner-General Faith Mazani said non-tax compliance had become a serious impediment to national development, adding the tax debt burden had reached “unprecedented” levels.
“Allow me ladies and gentlemen to speak about a serious issue confronting our country and this is the low level of compliance in our revenue mobilisation,” said Comm-Gen Mazani.
“Zimbabwe is sitting on an unsustainable and unprecedented tax debt situation. As at end of first quarter ended March 31, 2018, the authority’s tax debt was sitting at $4,227 billion and of this, 80 percent is owed by the private sector,” she said.
“Such a tax debt position is reflective of an abnormal revenue administration and very low levels of compliance that requires our urgent attention.”
Comm-Gen Mazani said official statistics indicated the number of registered taxpayers, which does not exceed 300 000, did not match the level of income and business activity in the country.
“It is only just a quarter of registered business players complying with their tax filing obligations,” she said.
“This leaves the tax burden on the shoulders of a few companies and individuals,” said Comm-Gen Mazani.
“I, therefore, pose this question to those of us here and those at home: Are we playing our part to build a sustainable Zimbabwe through payment of our taxes due to the fiscus?”
Business executives said the $4,2 billion debt was not a true reflection of what they owed and accused Zimra of taking a hard-line stance on corporates at a time the economy was facing challenges.
They complained that the tax authority was levying high rates and punishing them for systems shortcomings.
“About the $4,2 billion debt! I don’t believe that is true, the accounting systems at Zimra are not proper,” said one of the participants. “We have been going to Zimra with our receipts for tax clearance time and again and there seems to be a lack of will to rectify the issue,” he said.
“It is these delays that affect clients. The idea behind tax clearance has to change.”
Another participant said: “Zimra’s tax level is the highest in the region.”
Ms Sithulisiwe Ncube from Lion Stores said Zimra needed to deal with its data system, saying some of the said business tax arrears accrued since 2009 were based on miscalculations.
“I don’t know what’s happening with the Zimra data system,” she said. “The error is on Zimra’s side because they are not doing entries on time and interests are high. That has to be resolved.”
In her response, Comm-Gen Mazani acknowledged the concerns and said Zimra had since started a process, with the help of ICT experts, to clean up its data system.
She concurred that calculation errors could have been made when the country adopted dollarisation and Zimra “deeply regrets” such developments and was working to resolve the issue.
Comm-Gen Mazani said further engagements were being done with the International Monetary Fund to get proper systems advice.
“We are doing our best to clean up our systems and we hope by the end of the year we will give accurate accounts and issue clearances based on proper balances,” she said.
“Our debt position is bad, which is why we are here and we are saying those affected should come forward and these penalties and interests can be waived,” she said.
“It is our hope that these will be resolved soon, but that doesn’t change compliance levels. It is still few businesses which are bearing the tax burden. Our compliance levels are not yet at their best,” she stressed.
Comm-Gen Mazani urged businesses to take advantage of the tax amnesty window granted at the beginning of the year, which expires in June, to resolve their arrears.
Zimra has also put in place measures to weed out corruption through automation, asset declarations and lifestyle audits to identify cases of unjust enrichments.
“I would like to sincerely apologise for all the inconveniences that our valued taxpayers and clients have had to endure,” said Comm-Gen Mazani. “As a revenue administrator, we realise the need to receive and facilitate businesses that are responding to Government efforts to open Zimbabwe for businesses,” she said.
“Our focus is to improve service delivery that guides our operations going forward.”
Key strategies include addressing people issues, improving processes through technology, developing strategic partnerships with taxpayers and stakeholders and reforming the organisation through projects and programmes that ensure better service.