Zimra cracks down on tax avoidance

Zimbabwe's tax agency is cracking down on tax avoidance in both the public and private sector via underhand deals to try and recoup millions in lost State income, the head of the Zimbabwe Revenue Authority (Zimra) has said.

This comes as President Emmerson Mnangagwa's administration, which substantively took office last August, is planning to double its infrastructure spending this year to build roads, power plants and other projects, and the tax office figure for lost income would cover more than two-thirds of that spending.

As a proportion of gross domestic product (GDP), Zimbabwe, has a tax system characterised by low compliance levels as registered corporate taxpayers are not remitting their dues. In 2018, the authority collected a gross of  $5,36 billion or 21,8 percent of the country's GDP.

However, in the same year, the Finance ministry revealed that the authority is owed over $4,5 billion by tax evaders.

Zimra officials said firms were avoiding corporate taxes by running unofficial parallel payrolls while the small-scale enterprises have similarly ducked giving to Caesar what belongs to Caesar.

Zimra Commissioner-General Faith Mazani told journalists at a training workshop on taxation and customs tax last week that the taxman was making strides to curb tax evasion while urging the public to voluntarily comply with the authority as government heavily relies on revenue obtained through taxation to provide social services.

"Please continue to urge the nation to desist from all underhand dealings such as smuggling, tax evasion, use of undesignated crossing points and any other acts of economic malfeasance," said Mazani, in a speech read by Zimra executive assistant John Chakasikwa.

To fight smuggling, the authority currently uses scanners, risk proofing, physical examination, post importation audits, border patrols and physical examinations and road blocks in conjunction with law enforcement agencies.

Mazani added that automation of the tax system has helped deal with erosion of the tax base, resulting in more clients being registered on the Zimra system.

Coupled with this, Zimra has continued to engage companies which owe taxes, customs and excise duties to agree on payment plans to liquidate their debts, she added.

The tax authority also recently conducted lifestyle audits on company directors and other individuals in an ongoing probe against tax evasion.

"We all agree it is not good for clients to play cat and mouse games with the authority. Payment of taxes on time and in full enables government to meet obligations, which include provision of social services.

"On business side, voluntary tax compliance reduces unnecessary business costs which comes in the form of late payments or submission of returns, or failure to submit returns or remit payment," Mazani said.

Amid calls for need for educating the nation about tax intricacies in a simplified manner, the authority said it is holding voluntary compliance campaigns, workshops and seminars targeting every citizen to spread the gospel of tax compliance.

The launch of taxpayer education and engagement programmes, according to Zimra, will go a long way in comprehensively enhancing voluntary tax compliance to increase tax remittances in the country.