Business sounds alarm over aggressive ZIMRA tax audits

Zimbabwe's corporate sector is coming under increasing pressure from an intensified tax enforcement campaign by the Zimbabwe Revenue Authority (ZIMRA), with business leaders warning that aggressive audits, retrospective tax assessments and rising compliance costs are disrupting operations and undermining investor confidence.

The concerns were raised by Confederation of Zimbabwe Industries (CZI) chief executive officer Sekai Kuvarika, who said many companies are struggling to cope with what they regard as heavy-handed audit practices that require extensive historical records to be produced within tight deadlines.

According to Kuvarika, businesses are being forced to divert substantial financial and human resources to tax compliance exercises, often with little notice, creating the impression that they are presumed guilty before any wrongdoing has been established.

"There is a bit of aggression from ZIMRA on the audits," she said.

"The time it takes companies to respond, and the resources required to produce historical information within very short periods, makes them feel like they have already committed a crime when they have not."

Kuvarika called for a more predictable and risk-based audit framework that would reduce the compliance burden on companies with strong tax records.

She proposed an authorised economic operator-style system under which consistently compliant taxpayers would face fewer routine audits, allowing both businesses and the revenue authority to allocate resources more efficiently.

Her remarks come as ZIMRA reports a significant escalation in enforcement activity.

The tax authority said it recovered more than US$540.7 million and ZiG4.63 billion in unpaid taxes during 2025 through audits and investigations, underscoring both the scale of tax non-compliance and the growing reach of its enforcement programme.

ZIMRA director of finance and administration Ethel Chitanda said the authority completed 7,162 audit cases and 398 sector-based investigations during the year, with targeted investigations accounting for the largest share of the recovered revenue.

However, the intensified enforcement campaign has also contributed to a sharp increase in outstanding tax liabilities.

Assessed tax debt rose by 35.5% to ZiG31.15 billion as additional tax obligations uncovered during audits accumulated faster than taxpayers were able to settle them.

"The increase in debt is on account of intensive audits and investigations," Chitanda said, adding that the authority continued to uncover previously undeclared income across various sectors of the economy.

ZIMRA also reported a deterioration in tax remittance performance, with the proportion of assessed taxes that were actually paid falling to 57.5% from 75.4% in the previous year.

Officials attributed the decline to growing financial pressure on taxpayers, many of whom are struggling to settle assessed obligations despite filing their returns.

The authority's enforcement drive has also expanded into criminal prosecutions.

According to ZIMRA, 299 offenders were successfully prosecuted during 2025 as part of efforts to strengthen compliance through deterrence.

While the revenue authority maintains that tougher enforcement is essential to plug revenue leakages and improve tax compliance, business leaders argue that increasingly aggressive audits are creating uncertainty and complicating long-term investment planning.

The growing tensions are illustrated by several high-profile disputes involving major listed companies.

Delta Corporation, Zimbabwe's largest brewer, recently disclosed that cumulative tax assessments against the group have increased to approximately US$97 million from US$73 million, largely due to claims relating to the 2021 tax year.

The dispute centres on how tax liabilities should have been settled during Zimbabwe's currency transition period, with ZIMRA arguing that certain obligations ought to have been paid in foreign currency.

Delta maintains that it complied fully with the legal framework that existed at the time and has already settled a substantial portion of the disputed assessments under Zimbabwe's "pay now, argue later" principle.

Chief executive officer Matts Valela said nearly US$100 million remains under dispute, warning that an adverse outcome could have material financial implications for the company.

"We believe the 2021 assessment applies a methodology that was not provided for in law at the time," Valela said, adding that the company is pursuing the matter through both legal and administrative processes.

The growing number of tax disputes has also attracted the attention of government.

Treasury officials have encouraged companies to resolve disagreements through engagement with the Ministry of Finance and ZIMRA rather than lengthy court proceedings, arguing that many disputes can be settled administratively.

Permanent Secretary George Guvamatanga said many disagreements stem from differing interpretations of Zimbabwe's currency settlement rules but maintained that the legal framework has always been clear.

"Tax laws have always been very clear that taxes are payable in the currency of trade," he said, adding that courts have generally ruled in favour of the revenue authority in cases that have proceeded to litigation.

The widening divide between business and the tax authority highlights the delicate balance policymakers face between strengthening revenue collection and maintaining a business environment that supports investment, growth and formal sector expansion.