News / National
Government starts simplifying tax system
26 Apr 2019 at 02:02hrs | Views
GOVERNMENT has begun a process of simplifying its tax system while the Zimbabwe Revenue Authority (Zimra) continues to roll out operational reform strategies aimed at enhancing voluntary compliance and increasing domestic resource mobilisation, Finance and Economic Development Minister, Professor Mthuli Ncube, said yesterday.
Addressing industry and commerce executives during a breakfast conference on taxation organised by Zimra alongside the Zimbabwe International Trade Fair (ZITF) in Bulawayo, he said increased interaction between taxpayers and the tax collector was critical as it presents a wonderful opportunity for business to forge synergies with the authority.
Prof Ncube said taxation was a matter of national importance hence the need for increased stakeholder dialogue as a foundation for solid economic development. As such he said simplifying taxation procedures, improving compliance to widen the tax base and fighting corruption were major areas of focus for economic transformation.
"We continue to work on long-term plans to have the tax rules simplified while the revenue authority continues to implement tax reform strategies which include effective and extensive taxpayer education, business process re-engineering and automation through investing in robust ICT systems and building enabling infrastructure for revenue collection," said Prof Ncube.
A simplified tax system is one that has tax rules, which are easy to understand, tax procedures to follow and tax processes to undertake by taxpayers, in their bid to comply with the tax laws, said the minister.
Based on results from the Tax Administration Diagnostic Assessment Tool (TADAT) Assessment done by the IMF in 2018, he said Government was now able to assess the performance of the tax administration system and urged Zimra to improve its service delivery.
He said: "Use risk-based compliance strategies, as well as use modern tax data analytics approaches, including data matching or use of third party data to bring non-compliant taxpayers into the net."
Prof Ncube said systems that were key in curbing transit fraud such as the Electronic Cargo Tracking System were important given their positive impact to compliance and revenue collection. He said widening the tax base requires a high level of compliance by companies, which will result in enhanced collections by Zimra for the benefit of the fiscus and the country at large.
"We remain committed to current and future tax reforms geared at widening the taxbase so that the tax burden is shared by all – including by the informal sector for that matter. Going forward, therefore, our policy thrust is to continuously reform our tax system so that taxes are modernised or restructured to broadly capture all economic activity/transactions - including the informal and shadow ones - raise revenue, close the fiscal deficit and restore confidence through low budget deficit and reduced domestic debt," he said.
The ongoing reforms have already seen Government revenue collections surpass targets with Treasury recording surpluses of average $100 million per month in the past few months.
A latest Zimra report shows $2 billion was collected in the first quarter of 2019, above target by about 41 percent.
However, Prof Ncube said more needs to be done to cultivate the culture of voluntary compliance by waging a tough war against corruption, tax evasion, profit shifting among other vices.
"Corruption is a scourge, which derails economic development. It is abuse of authority for personal gain leading to unjust enrichment. The fight against corruption cannot be won by Zimra on its own as it is systemic and entrenched not only in Zimra but in the fabric of our society as a whole and, hence, requires cooperation and partnership with all stakeholders," said Prof Ncube.
He called on Zimra and all arms of Government, and the private sector "to tenaciously fight tax and duty corruption unless" to ensure progress achieved so far is not reduced.
"My clarion call is for all of us to seize the opportunity to close all corruption loopholes. It is essential, therefore, that we adopt international best practices in dealing with tax corruption. It is critical that all stakeholders, including the law enforcement agencies, the judiciary, the legislature and the executive, speak with one voice and enact laws that have deterrent penalties," said Prof Ncube.
"The future for us as a nation is intricately interwoven and rests squarely on our drive to forge impermeable alliances as business and the Zimbabwe Revenue Authority."
Speaking earlier, Zimra Commissioner General, Ms Faith Mazani, said the tax collector was reforming its operations with the view of facilitating investment and trade for industrial growth.
She said Zimra has a mandate to enhance ease of doing business as a key pillar in the economy and promoting legitimate trade hence the drive to collect adequate resources to enable Government to finance critical development projects.
Ms Mazani urged business to play their role by paying taxes saying those still owing taxes should come forward and make payment plans as Zimra was not keen to see businesses closing. She said efforts were being made to increase focus on non-registered small business to ensure they pay tax too.
Ms Mazani admitted that tax payers were facing challenges in getting tax refunds but said processes were being done to urgently address the issue.
Zimra board chair Mr Callisto Jokonya paid tribute to business sector for providing revenue to fiscus through tax saying Zimra has met targets because of honesty and integrity by tax payers who appreciate that their money was being used for national development.
Addressing industry and commerce executives during a breakfast conference on taxation organised by Zimra alongside the Zimbabwe International Trade Fair (ZITF) in Bulawayo, he said increased interaction between taxpayers and the tax collector was critical as it presents a wonderful opportunity for business to forge synergies with the authority.
Prof Ncube said taxation was a matter of national importance hence the need for increased stakeholder dialogue as a foundation for solid economic development. As such he said simplifying taxation procedures, improving compliance to widen the tax base and fighting corruption were major areas of focus for economic transformation.
"We continue to work on long-term plans to have the tax rules simplified while the revenue authority continues to implement tax reform strategies which include effective and extensive taxpayer education, business process re-engineering and automation through investing in robust ICT systems and building enabling infrastructure for revenue collection," said Prof Ncube.
A simplified tax system is one that has tax rules, which are easy to understand, tax procedures to follow and tax processes to undertake by taxpayers, in their bid to comply with the tax laws, said the minister.
Based on results from the Tax Administration Diagnostic Assessment Tool (TADAT) Assessment done by the IMF in 2018, he said Government was now able to assess the performance of the tax administration system and urged Zimra to improve its service delivery.
He said: "Use risk-based compliance strategies, as well as use modern tax data analytics approaches, including data matching or use of third party data to bring non-compliant taxpayers into the net."
Prof Ncube said systems that were key in curbing transit fraud such as the Electronic Cargo Tracking System were important given their positive impact to compliance and revenue collection. He said widening the tax base requires a high level of compliance by companies, which will result in enhanced collections by Zimra for the benefit of the fiscus and the country at large.
"We remain committed to current and future tax reforms geared at widening the taxbase so that the tax burden is shared by all – including by the informal sector for that matter. Going forward, therefore, our policy thrust is to continuously reform our tax system so that taxes are modernised or restructured to broadly capture all economic activity/transactions - including the informal and shadow ones - raise revenue, close the fiscal deficit and restore confidence through low budget deficit and reduced domestic debt," he said.
The ongoing reforms have already seen Government revenue collections surpass targets with Treasury recording surpluses of average $100 million per month in the past few months.
A latest Zimra report shows $2 billion was collected in the first quarter of 2019, above target by about 41 percent.
However, Prof Ncube said more needs to be done to cultivate the culture of voluntary compliance by waging a tough war against corruption, tax evasion, profit shifting among other vices.
"Corruption is a scourge, which derails economic development. It is abuse of authority for personal gain leading to unjust enrichment. The fight against corruption cannot be won by Zimra on its own as it is systemic and entrenched not only in Zimra but in the fabric of our society as a whole and, hence, requires cooperation and partnership with all stakeholders," said Prof Ncube.
He called on Zimra and all arms of Government, and the private sector "to tenaciously fight tax and duty corruption unless" to ensure progress achieved so far is not reduced.
"My clarion call is for all of us to seize the opportunity to close all corruption loopholes. It is essential, therefore, that we adopt international best practices in dealing with tax corruption. It is critical that all stakeholders, including the law enforcement agencies, the judiciary, the legislature and the executive, speak with one voice and enact laws that have deterrent penalties," said Prof Ncube.
"The future for us as a nation is intricately interwoven and rests squarely on our drive to forge impermeable alliances as business and the Zimbabwe Revenue Authority."
Speaking earlier, Zimra Commissioner General, Ms Faith Mazani, said the tax collector was reforming its operations with the view of facilitating investment and trade for industrial growth.
She said Zimra has a mandate to enhance ease of doing business as a key pillar in the economy and promoting legitimate trade hence the drive to collect adequate resources to enable Government to finance critical development projects.
Ms Mazani urged business to play their role by paying taxes saying those still owing taxes should come forward and make payment plans as Zimra was not keen to see businesses closing. She said efforts were being made to increase focus on non-registered small business to ensure they pay tax too.
Ms Mazani admitted that tax payers were facing challenges in getting tax refunds but said processes were being done to urgently address the issue.
Zimra board chair Mr Callisto Jokonya paid tribute to business sector for providing revenue to fiscus through tax saying Zimra has met targets because of honesty and integrity by tax payers who appreciate that their money was being used for national development.
Source - chronicle
