Zimra embarks on tax administration reforms

THE Zimbabwe Revenue Authority (Zimra) says it is ready to contribute to a "new dispensation" through tax administration reforms, which seek to simplify tax rules and help taxpayers to meet regulatory requirements more effectively and efficiently.

Tax administration involves the implementation and enforcement of tax laws and regulations.

Zimra commissioner-general Faith Mazani, who addressed the telecommunications industry at a breakfast last week, said the reforms entailed a total overhaul of the process and organisation of tax administration with a focus on improving Zimra systems and processes; simplifying the tax code and propagating a new tax culture based on partnership and voluntary compliance.

The changes will, however, not affect the tax structure, currently dominated by indirect taxes, notably import duties and excise duties.

"What we are saying is we want to improve our system and we are trying to reform our tax code and make it more convenient, but we need our clients to understand the issue of voluntary compliance," Mazani said.

"The reason why we called you here today is that we want to build and improve our relationship with you. Our desire is to open channels of communications so that we can contribute to the Zimbabwean renaissance under the mantra — Zimbabwe is open for business. Indeed as we build and strengthen this relationship our vision as Zimra can be summarised into four Ps — People issues, Processes, Partnerships and Projects."

The performance of Zimra systems and the wider tax process will be automated and optimised to reduce downtimes and make them more efficient and cost-effective.

Informed by the motto, "my taxes, my duties — building my Zimbabwe", the reforms are expected to make tax laws more understandable to taxpayers and induce voluntary compliance through self-assessment in order to forestall costly breaches.

Non-compliance imposes a "tax" on operators through penalties and interests, leading to an inefficient use of resources.

Zimbabwe's tax system was characterised by high tax evasion, tax avoidance and corruption.

Mazani said Zimra was also eager to forge partnerships with taxpayers in order to "know-what-we-tax" better.

"The authority is actively engaging with its stakeholders, including yourselves, to hear feedback and to act on it. In the process, Zimra hopes to improve on its efficiencies and make it easier for valued clients to comply voluntarily," Mazani said.

Zimra is owed as much as $4,5 billion in tax arrears, including unremitted value-added tax, half of which comprise penalties and interests.

Mazani said the authority had extended the six-month tax amnesty granted by government to tax defaulters, which lapsed on June 30 2018. The amnesty waived penalties and interests and will be rolled over, but only for those who voluntarily owned up and settled their accounts.

As a low-income country with a narrow and shrinking revenue base, Zimbabwe depends more on excise taxes and tariffs and less on broad-based taxes. In terms of international best practices, customs duties should not be used as an instrument of primary revenue collection.

"We trust that the mutual engagement that will follow this forum will equip us with priceless and enhanced skills and solutions on the taxation of the telecommunications industry."