eBusiness Weekly
Golden Sibanda
The Zimbabwe Revenue Authority (Zimra) has warned it will use prosecution and raids on private residence suspected of doing business, but evading paying taxes as part of strategies to recover billions of dollars owed.
The State revenue authority, which has a revenue target of $6,2 billion for the 2019 fiscal year, is owed a staggering $4,2 billion in unremitted taxes, a figure almost equivalent to Zimbabwe’s National Budget for 2018.
The target speaks to Finance and Economic Development Minister Professor Mthuli Ncube’s $8,2 billion National Budget for 2018; meaning the revenue authority has an inescapable mandate to raise 75 percent of funding needed for public finance programmes.
Zimra surpassed its 2018 revenue target closing the year at $5,36 billion-which was 24,71 percent above the 2018 target — with excise duty being the biggest contributor.
Zimra commissioner general Faith Mazanhi told Business Weekly this week that Zimra had included prosecuting offenders among strategies to recover unpaid tax, with a number of cases already before the courts. An estimated 80 percent of the Zimra debt is owed by private sector. Former Zimra chairperson Willia Bonyongwe, once estimated the authority was collecting 30 percent of what it should if all tax payers paid up.
Ms Mazanhi also said Zimra will continue to include other harsh strategies such as garnishing the bank accounts of tax offenders, as provided for in the country’s tax laws, to enforce compliance with statutory requirements and recover unpaid tax.
“The powers (to effect garnishee orders) are there, but we are widening our collection strategies, it’s not just about garnishing, (but also) sitting down with tax payers and negotiating how they are going to pay over a period.
“Because we are coming through with a collaborative approach, tax payers have been coming (through), so we have sort of been holding off the garnish approach (and) in some of (the cases) we have actually gone for prosecution.
“You may have noticed that Zimra used not to go for prosecution because the cases would not even be attended to, but now with the thrust of (the new) Government, we have seen a number of people going through the courts or are set to go through the courts. So, we are using different strategies,” Ms Mazanhi said.
Asked to comment on plans by Treasury to give powers to raid private residence if Zimra suspected business activity to be taking place without the operators paying taxes, Ms Mazanhi said the authority already had such powers.
“In terms of our income tax laws, we have the powers (to raid private residence suspected of doing business without paying taxes). That has always been there, we have the powers from section C of our laws (Income Tax Act), I am not sure about the new regulations,” she said.
In an effort to encourage tax payers to regularise their tax affairs, Government, through the Finance Act Number 1 of 2018 published on 15 March 2018, made provisions for the granting of a tax amnesty to persons on application.
Persons qualifying for amnesty included companies, corporates or unincorporated body of persons and trusts. A tax amnesty is relief granted on penalty, interest and prosecution.
But after the expiry of the grace period in December last year, Ms Mazanhi said Zimra had started following up on those that made promised to settle their outstanding taxes.
“We have started going out, intensifying our audits; our follow ups, which has seen some people coming forward, filling their tax returns and registering for tax purposes.
“The more we audit (the more we discover unpaid taxes), because a debt is established either when a tax payer submits a (tax) return and does not pay or when we go and audit and establish the debt.
‘‘So, because we intensified our enforcement; we may have collected some (of the $4,2bln debt), but its continuous because we are actually going after some people who are not paying and establishing that they were supposed to pay,” she said
Previously, Zimra used strategies that entailed punitive penalties on overdue taxes, garnishee orders on defaulters’ bank accounts, incentives such as tax amnesties and negotiations for payment plans to clear tax liabilities.
Garnishing, Ms Mazanhi said, remained party of the strategies the tax authority will employ to recover tax liabilities.
“It is still available, but we had given voluntary disclosure allowance up to end of December,” she pointed out.
The Zimra chief said garnishing bank accounts of tax evaders was temporarily suspended until end of December last year to give tax payers who owe Zimra opportunity to regularise their tax affairs after they negotiated payment plans or gave commitment to clear their debts.
