Kereke takes on Zimra over tax assessments

The Zimbabwe Revenue Authority should be stopped from using its statutory powers to collect huge sums of money from businesses without making proper tax assessments, RMC Hospital owner Dr Munyaradzi Kereke has said.

Dr Kereke, who is involved in a $1,7 million tax storm with the revenue authority over allegedly non-payment of tax for the past three years, says to allow the levying of his hospital business pending the determination of the appeal and objection to tax assessment breaches the law.

Dr Kereke made the appeal in his heads of argument prepared by his lawyer Advocate Lewis Uriri and filed at the Supreme Court on Wednesday.

He argued that the tax assessment against his business was grossly unreasonable and for the lower court to uphold garnishes imposed on RMC major debtors pending appeal was unlawful.

"This is more so given that respondent (Zimra) does not need the sanction of a court and is afforded the right of self help by statute," stated Dr Kereke.

"Unless carefully controlled, that right to self help can be used to the ultimate destruction of the principle underlying revenue collection. It is not to drive tax payers into liquidation, but to raise revenue for Consolidated Revenue Fund."

At the Supreme Court, Dr Kereke will not seek to impugn the manner in which Zimra arrived at the decision, but the rationality of assessing tax under certain heads contrary to the law.

"It is that irrational decision, not the manner of arriving thereat," he said.

He further argued that the heavy handed conduct of Zimra was apparent, citing the incident of 2011 where an alleged fictitious assessment was thrown at RMC.

Dr Kereke argues that after pointing out abnormalities, Zimra furnished him with a second assessment which reduced the assessed taxable profit from $2 468 340 to a loss of $297 609.

However, for the same year, Dr Kereke argued that Zimra again changed the assessed confirmed loss position of $297 609 to alleged positive profits which formed basis for objections and the application to the High Court.

In this case, Dr Kereke argued that the finding of the lower court that these random assessments were normal on the basis of fresh information allegedly trickling to Zimra is a complete misdirection in that he placed on record proof that vital information regarding 2011 was in fact long provided to Zimra.

He contends that while Section 69 of the Income Tax Act empowers Zimra to garnish for assessed taxes, RMC was grossly violated because the assessments were fictitious and therefore unlawful.

Dr Kereke appealed to the superior court to quash the lower court's decision and lift garnishee orders imposed on RMC's major trade debtors - Cimas, Premier Service Medical Aid Society and Stanbic Bank - to collect tax liabilities amounting to $3 297 103, 62.

The balance was made up of penalties for late payment of taxes, which included Pay As You Earn, Income Tax and Withholding Tax.

Early this month Zimra slashed RMC's tax bill from the original $4 million to $1,7 million after Dr Kereke submitted information required for the assessment of taxes for the last three years.