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Zimra to lose $1 billion in revenue this year

by Staff reporter
30 Oct 2016 at 10:37hrs | Views

THE Zimbabwe Revenue Authority (Zimra) is expected to lose US$1 billion in potential revenue this year as the number of companies applying for concessions to import capital goods duty free increases. Government has been agreeable to the facility as it bets on increased investment in the productive sectors of the economy.

Worryingly, Zimra has not been able to meet its revenue targets. The tax authorities managed to meet and exceed their targets during the third quarter to September when revenues at US$920 million were 6 percent above the target. Zimra board chairperson Mrs Willia Bonyongwe believes that duty-free concessions, zero-rated goods and some regional treaties are a threat to a sustainable tax base.

"What we are now having are small interest groups going to lobby the Ministry of Finance to say 'for us to be able to do this and that, can you please give us these concessions' and they are piling up.

"And per quarter right now, they are costing us over US$300 million," said Mrs Bonyongwe.

In 2014, Finance and Economic Development Minister Mr Patrick Chinamasa introduced a rebate of duty on imported capital goods or goods taken out of bond for exclusive use in the tourism business in a bid to stimulate growth in the sector. Through the concessions, capital goods are imported duty free in terms of the Customs and Excise Tourism Rebate Regulations 2013 published in Statutory Instrument 173 of 2013.

Zimra's tax base is also being affected by tax avoidance and tax evasion. About 4 000 big, non-compliant companies were recently discovered by the Authority. Automation has mainly given the tax collection body the ability to enforce compliance.

Efforts will also be channelled towards lifestyle audits and the whistle blower facility in order to fight corruption. The whistle blower facility, which gives people who report acts of corruption by Zimra officials and or importers 10 percent of the total value of the loot if recovered, has helped in improving revenue collection. During the second quarter of the year, Zimra recovered US$25 million after tip-offs from whistle-blowers.

From January to September 30, 2016; fuel worth US$506 000 that had been purportedly destined for other regional markets was recovered on the local market. More cases are currently under investigation. Zimra is currently undergoing massive restructuring to improve its operational efficiency.

Commissioner-General Mr Gershem Pasi is presently under suspension. Last week, Zimra also suspended three executives – Mr Robert Mangwiro, Mr Shadreck Dimingo and Ms Truenia Dimingo — on allegations of misconduct. Zimra board secretary and director for legal and corporate services Ms Florence Jambwa told The Sunday Mail Business last week that since January 2016 to date, the tax collector has dealt with 34 corruption-related cases.

"Out of these cases, six people were dismissed; 14 were given written warnings; 13 cases are still pending; and one case was withdrawn," said Ms Jambwa.

In order to widen the tax base, all wholesalers and retailers will not be allowed to sell goods and services without a fiscal tax register as from January 2017. The electronic cargo tracking system, which is meant to eliminate transit fraud, will become operational by November 1 this year.

Source - online