Zimra goes after the rich and famous

Mansions owners will soon have to answer questions from the taxman after the Zimbabwe Revenue Authority (Zimra) commissioner general, Gershem Pasi, indicated that he would soon be launching an investigation into the sources of funding for the mega structures.  

Faced with a dwindling revenue base due to massive company closures and lack of activity in the economy, Zimra is coming up with a cocktail of measures to squeeze cash from both the rich and the poor.

The hard-pressed national tax collector has in recent months been forced to be creative and scratch everywhere to meet the Zimbabwe government's huge wage bill and the ever-increasing capital expenditure.

Government mostly relies on Zimra collections, mainly value added tax (Vat), to pay its 240 000 workers.

Pasi told Parliament recently that his organisation was currently working flat out to ensure that everyone in the country - especially the rich, who are notorious for tax evasion - was up-to-date with their tax obligations.

"We actually have an exercise going on, where we are working with the Deeds Office to create a data base of the property sector to ensure that developers and home-owners were complying with taxation laws," Pasi said.

"This will also assist us in carrying out our audits on home-owners."

This comes as huge mansions and villas are sprouting in Zimbabwe's leafy suburbs at a time when the majority of the population are struggling to make ends meet, raising concerns of possible tax evasion by the affluent in society.

The Zimra boss indicated that he was consulting Finance minister Patrick Chinamasa to come up with a law that allows the tax collector to attach fixed properties of tax evaders.

"We want the law to be strengthened so that we can attach immovable properties so that when we see you have (unlawfully) taken money from the company to build mansions, we want to be able to take the property," he said.

The latest statement by the national tax collector boss follows revelations that the country is believed to have lost nearly $85 million in unpaid taxes from State enterprises, parastatals and local authorities between 2009 and 2013.

Zimbabwe is ranked 13 on the list of African countries losing tax revenue and the Afrodad estimates that the country lost close to $12 billion over the past three decades in uncollected tax.

A recent study commissioned by Afrodad entitled: "What has tax got to do with development: A critical look at Zimbabwe, Mozambique and Lesotho's Taxation Systems", established that revenue collection in Zimbabwe is poor due to the weaknesses in policies that regulate tax compliance.

Poor revenue collection was attributed to failure by Zimra to effectively monitor business transactions. The study noted that Zimbabwe had failed to attract investment over the past decade and official development assistance had been little, resulting in over-reliance on taxes for revenue generation.

The study established that government was aware of its short-comings especially in the mining sector and had proposed reforms in the legislation to increase revenue collection.

But many of the reforms, such as the draft Income Tax Act, still have to go through Parliament. And it is not clear how the lack of expertise in the ministry of Finance and Zimra will be addressed.

"It was acknowledged that the informal sector should be brought into the tax net but not much progress has been made on this," reported the study.

Pasi indicated recently that government was working on a cocktail of measures to formalise small and medium enterprises so that they pay taxes and directly contribute to economic growth. Experts from South Korea will assist the government in formalising a sector that is said to hold $7,4 billion, most of which never - or only fleetingly - enters formal channels.

"One of the programmes we are also working on and government will avail soon is the self-service centres," he said.

"We are now going to be bringing ARMs (Automated Revenue Machines); again we have our technical partners, I am sure they should arrive this week so that we finish our project.

"It is high time we protected and formalised the SMEs in order to preserve their diversity. We need to focus on how to nurture and provide decent accommodation and operating environment."

Pasi said Zimra could not merely wait to tax businesses, but should assist in properly structuring them.

He said SMEs could grow into big brands as has been the case with Samsung and LG.

"If we create order, we create areas where people can do honest business because every citizen must be proud of contributing to the nation by paying taxes," he said.

The Zimra boss noted that chasing away vendors and other informal business people from the street was akin to chasing away revenue.

"We can't have revenue when we chase people away," he said.

"We create order and create areas where people can do honest business and everyone must contribute to the development of nation. We need an innovative way of creating that."

The Daily News is also reliably informed that Zimra is planning to introduce fiscalised machines on public transport vehicles such as kombis and taxis to ensure operators do not evade taxes.

"We said we needed fiscalised machines even in kombis such that the moment one starts driving it records to Zimra the mileage travelled and enforces charges per kilometre. We are going to start with five taxis which will be run as a pilot project so that when we roll it out, people will know what we are talking about," Pasi said.