Zimra launches aggressive crackdown on transfer pricing abuse

Zimbabwe's tax authority has launched an aggressive enforcement campaign targeting multinational corporations and large domestic firms accused of abusing transfer pricing arrangements and illicitly externalising profits.

The Zimbabwe Revenue Authority (Zimra) says it is seeking to recover billions of dollars lost annually through illicit financial flows, which officials argue have deepened the country's foreign currency constraints and worsened fiscal pressures.

Senior Zimra officials confirmed that companies suspected of manipulating cross-border transactions are now under active investigation, with several already subjected to forensic audits, tax reassessments and penalties.

"This is operational," a senior official said. "Zimra is going after corporates involved in transfer pricing abuse and the externalisation of funds."

At the centre of the crackdown is a major technological overhaul, including the deployment of advanced data analytics and artificial intelligence-driven systems to identify and prioritise high-risk taxpayers. Officials said the tools allow the authority to move beyond routine audits and whistle-blower tips towards systematic, large-scale detection of complex profit-shifting schemes.

"It has been reported that artificial intelligence-driven systems are being used, or considered, to strengthen detection of such practices," the official added.

Transfer pricing abuse has long been identified by Treasury and the Reserve Bank of Zimbabwe as one of the most damaging sources of revenue leakage, particularly in mining, manufacturing, telecommunications and financial services. Authorities accuse firms in these sectors of under-pricing exports, inflating management fees and royalties, and routing procurement costs through related offshore entities in low-tax jurisdictions.

Confirming the development, Zimra's marketing and corporate affairs executive, Gladman Njanji, said artificial intelligence now forms a core pillar of the authority's reform agenda.

"Zimra has formally adopted artificial intelligence-driven systems as part of its new five-year transformation strategy launched in 2025," Njanji said. "The initiative is aimed at strengthening revenue collection through enhanced risk profiling, data analytics and improved detection of non-compliance patterns, including in transfer pricing.

"The strategy was approved in the fourth quarter of 2025 and is currently in a phased rollout stage, with tangible results expected progressively as the systems become fully operational," he added.

Officials said the abuses under investigation are closely linked to the externalisation of funds at a time when Zimbabwe faces acute foreign exchange pressures.

"This is no longer about compliance education," a senior tax official said. "We are dealing with deliberate, structured schemes. The response has to be equally sophisticated and decisive."

According to multiple sources, Zimra is using AI-enabled risk engines to cross-reference customs data, transfer pricing documentation, financial statements, banking flows and corporate group structures. Companies flagged by the systems are subjected to exhaustive audits that can span several years and multiple jurisdictions.

The move marks a turning point for an authority that has historically relied on manual audits and tip-offs. Zimra believes the new technology will enable it to detect patterns of abuse that previously went unnoticed and to do so at scale.

Firms deemed high-risk face backdated tax assessments, penalties and interest charges, with criminal investigations and asset recovery possible in severe cases. Officials said the authority is prepared to pursue litigation where necessary.

The campaign aligns with broader government efforts to curb illicit financial flows, which the Reserve Bank of Zimbabwe has repeatedly blamed for fuelling exchange-rate volatility and undermining monetary stability.

Finance ministry officials estimate that transfer pricing abuse and fund externalisation cost Zimbabwe more than US$1,5 billion annually — a figure that exceeds state spending on several critical social services and infrastructure programmes combined.

President Emmerson Mnangagwa's administration, constrained by limited access to international financing and rising fiscal pressures, has made domestic revenue mobilisation a strategic priority.

In recent years, Zimbabwe has strengthened its transfer pricing framework by aligning it with international standards, expanding disclosure requirements and increasing penalties. Authorities concede, however, that enforcement lagged behind regulation — a gap Zimra now says it is closing decisively.

Corporate executives and tax advisers say Zimra's posture has hardened noticeably in recent months, with audits becoming broader, more technical and less open to negotiation. Documentation requests now extend deep into group-level transactions, including intellectual property arrangements and offshore financing structures.

Several companies, officials said, are revising transfer pricing policies, unwinding certain cross-border arrangements and setting aside provisions for potential tax liabilities.

Business groups have cautioned that while tackling abuse is necessary, enforcement must remain predictable and insulated from political interference to avoid deterring investment.

Zimbabwe's approach mirrors a broader shift across Africa, where revenue authorities are increasingly turning to technology and cross-border information sharing to combat profit shifting by multinationals. South Africa and Kenya have both expanded the use of data analytics in pursuing complex international tax cases.