Zimra audits lifestyles of big spenders

The Zimbabwe Revenue Authority is monitoring big spenders who make outrageously-priced purchases in and outside Zimbabwe under a new tax compliance enforcement strategy.

The surveillance covers bank records, deeds and other title registers that help determine whether targets are paying taxes.

Zimra introduced the lifestyle audit in 2016, largely focusing on individuals who have publicly declared their properties and wealth.

The audit now encompasses "everyone, even a person who buys an expensive watch", and each individual is being asked to explain his/her tax-vs-income position. In an interview with The Sunday Mail last week, Zimra board chairperson Mrs Willia Bonyongwe said monitoring would continue over a sustained period.

She would not, however, be drawn into disclosing names of individuals being monitored. Mrs Bonyongwe said, "The audits are going to be a permanent feature of our tax compliance measures. If we hear that you bought an expensive watch, for example, we will be keen to know whether you are paying tax or not."

Zimra Acting Commissioner-General Mr Happias Kuzvinzwa chipped in: "Money has a tendency of leaving footprints, and what we are simply doing is following those footprints. If you are running a business, for instance, and that business is expanding, we will definitely ask for your profit-and-loss (statement). There is no way you can expand or build houses if you don't have the income; or drive big and beautiful cars without an income. So, those are the things we are looking at. It's that simple; you can't spend what you don't have. Therefore, we just read your expenditure against your income since your expenses mirror your income.

"This is not personal, neither is it political or a witch-hunt. We are just following those footprints because you can't leave a lie and pretend not to have money. It will stick out because generally, if you have money, you spend, and if we discover that we will simply ask for the State's share."

Mr Kuzvinzwa said Zimra was educating citizens on the imperative of tax payment and the centrality of revenue in the national governance and development matrix.

"We are saying those who have challenges must approach us instead of waiting for us to come to them; the penalties will be heavy. We want citizens to pay tax voluntarily. Obviously, those who don't pay tax will be liable to penalties and that will not be good.

"Elsewhere in the world like Singapore, for instance, it's a serious offence not to pay tax. In fact, you will go to jail and after the prison term, you will still be required to pay what you owe."

Economist Dr Gift Mugano said: "Paying tax is a statutory obligation, and there's nothing sinister in making sure that individuals are audited. Lifestyle audits are standard practice internationally. It is important for governments to put systems in place to ensure everyone is tax compliant.

"Audits are the way to go considering that many people are not tax compliant. The challenge that needs to be addressed immediately, though, is formalising the economy. Financial inclusion is another important area as it makes it easier to monitor transactions. People must know that paying tax is paying for national development. It does not constitute harassment when Zimra questions individuals."

Zimra has for some time been failing to meet its revenue targets largely due to tax evasion.

The Authority now appears to be on the right path on the back of its massive compliance drive.

In the first quarter of 2017, Zimra surpassed a revenue target of US$826, 63 million by six percent to reach US$862,47 million, with "operational efficiency and effectiveness, cargo tracking and an enhanced border control system" accounting for this huge leap.