Zimra mulls severe penalty on tax debts

The Zimbabwe Revenue Authority (Zimra) is considering imposing severe tax penalties to compel public and private entities to settle substantial outstanding tax debts. These debts primarily stem from companies' incorrect tax assessments. The domestic tax debt amounts to ZiG348.33 million and US$308.03 million, while trade taxes total ZiG506.39 million and US$113.37 million.

Zimra Chairman Anthony Mandiwanza noted that 80% of this debt resulted from new assessments following audits and investigations, with 20% representing uncollected debt. Zimra is implementing various strategies to collect these owed taxes, including a proposed review of the interest rate on outstanding taxes. The proposal suggests aligning the rate to the bank policy rate (BPR) plus 5% to encourage prompt tax payments.

Economist Dr. Prosper Chitambara supports this proposal, stating that higher interest rates could deter tax evasion. However, some business stakeholders, like economist Mr. Tinevimbo Shava, caution that while the measure might improve compliance, it could also financially strain companies already facing challenges.

Despite these issues, Zimra reported positive revenue performance in the first half of 2024, with net revenue reaching ZiG36.06 billion, surpassing the target of ZiG35.39 billion. This success is attributed to various initiatives in key tax areas and the introduction of the new currency, ZiG, which has stabilized the economic environment.

Zimra remains committed to reducing the debt burden and ensuring tax compliance through measures like the proposed interest rate adjustment. The goal is to foster a culture of tax compliance that benefits the entire nation.