Companies flout tax directive

MANY businesses are not complying with a government directive to adopt fiscalised tax registers as part of efforts to increase revenue collections and plug off leakages, Standardbusiness has established.

Well-placed sources said while about 50% of the country's businesses had complied with the government directive, there were still several companies that were dragging their feet.

This comes as the Zimbabwe Revenue Authority (Zimra) has been accused of abating non-compliance by extending exemptions for businesses that have come up with excuses.

On Friday, Zimra said it was pursuing non-compliant firms through moral suasion.

The tax collector said Value Added Tax (VAT) registered businesses had adopted the fiscalisation project.

"More than 50% of VAT registered operators have complied with fiscalisation and interface requirements and 90% of large taxpayers have now been interfaced," Zimra said in e-mailed responses.

Justifying the extension of deadlines, Zimra said although it had introduced punitive measures to deter non-compliance, it believed in engagement.

"That is why there have been individual engagements, public notices and use of other media platforms encouraging taxpayers to fiscalise. In addition, the following measures have been put in place to encourage compliance; denial of tax clearance to non – interfaced Zimra systems, clients are now being penalized and clients are now being prosecuted," Zimra said.

Last year, there was a push to disqualify noncompliant businesses from getting tax clearance certificates.

But the tax collector has since allowed special arrangements for those that are yet to meet the requirement.

However, experts say with prolonged exemptions continuing, government was losing millions of United States dollars in potential taxes.

The matter is closely tied to abuse by businesses who are collecting payments in hard currency and only paying tax in Zimbabwe dollars.

Fiscalised tax registers, which can be monitored easily and avail updated statistics have been cited as the solution to this crisis.

Zimra said it was engaging individuals, through letters, public notices and other media platforms encouraging them to fiscalise.

The tax collector said there had been positive response through an increased number of operators who were now fiscalised and interfaced.

In May, Zimra said only 40 061 businesses out of an annual average of 63 000 that regularly apply for tax clearance, had acquired 2021 tax clearance certificates, translating to a 63% compliance rate.

As of the end of July, Zimra said, 62 300 clients had been issued with ITF 263.

"Zimra can only issue compliant taxpayers with ITF 263," Zimra said.