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Zimra faces deepening tax enforcement crisis
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The Zimbabwe Revenue Authority (ZIMRA) is grappling with a growing tax enforcement crisis as the dominance of the cash economy, rampant informality, and high-profile tax disputes expose critical weaknesses in the country's tax collection system.
Commissioner General Regina Chinamasa this week gave a candid assessment of the authority's challenges, citing the untraceable nature of cash transactions, limited investigative capacity, and evolving business structures as major obstacles undermining revenue mobilisation efforts.
"The cash economy makes it difficult to enforce some of the tax rules," Chinamasa admitted. "The level of disputes we are seeing speaks to the non-traceability of transactions and limited capacity for audits and investigations. We need to continuously realign ourselves to developments on the ground."
While she refrained from naming specific companies, insiders confirm that protracted tax disputes with corporate giants such as Delta Corporation and Innscor Africa have highlighted glaring enforcement gaps.
Delta, Zimbabwe's largest brewer, is embroiled in a multi-million-dollar dispute with ZIMRA over alleged under-declarations linked to extensive cash sales. Innscor, the country's leading food and retail conglomerate, faces similar battles over tax assessments tied to its cash-heavy retail operations.
"These corporate disputes highlight what ZIMRA has warned about for years - the cash economy creates blind spots, even among the largest taxpayers," said a senior tax consultant. "If companies like Delta and Innscor struggle, imagine the scale of the problem in the informal sector."
Over 70% of Zimbabwe's transactions are estimated to occur outside formal banking channels, leaving large portions of economic activity invisible to tax authorities.
Despite these challenges, ZIMRA reported collecting ZWG76.4 billion in the first half of 2025, slightly above its ZWG75.9 billion target. Chinamasa attributed this performance to intensified enforcement, tax base expansion, and strategic policy interventions.
ZIMRA has set an ambitious US$7.155 billion revenue target for 2025 but experts warn that without decisive steps to tackle informality, cash reliance, and corporate non-compliance, the goal may remain elusive.
The authority's voluntary disclosure drive for smuggled vehicles, offering a one-month amnesty period for owners to regularise their status, is part of efforts to plug revenue leakages.
"We are doing a carrot-and-stick approach. People have one month to come forward and regularise their vehicles," Chinamasa explained. "It's another source of revenue, but more importantly, it ensures we have properly customed goods within the country."
ZIMRA is also banking on technological innovations, including artificial intelligence (AI), to identify non-compliance and accelerate enforcement.
"The digital trajectory is a game-changer. AI helps us pinpoint non-compliance and expedite enforcement processes," she said.
However, critics remain sceptical, arguing that without broader economic reforms to formalise the vast informal sector and reduce cash dependence, technology alone cannot resolve enforcement challenges.
Independent economist Gift Mugano commented, "Digitalisation is good, enforcement is good, but when 70% of your economy operates informally and relies on cash, you're fighting an uphill battle."
Meanwhile, the high-profile tax disputes with Delta and Innscor have reportedly sparked unease among other large corporates, who fear increased scrutiny as ZIMRA steps up sector-based audits.
"The message is clear: no one is immune. But the real question is whether ZIMRA has the capacity to follow through, given the complexity of some corporate transactions," said a Harare-based tax expert.
While surpassing revenue targets offers some optimism, experts warn that systemic issues - including limited audit capacity and the persistence of a cash-driven informal economy - threaten Zimbabwe's long-term fiscal stability.
As Commissioner General Chinamasa concluded, ZIMRA must remain agile, technologically equipped, and adaptive to navigate the complexities of Zimbabwe's economy.
"We need to continue to be aligned to developments that are happening. Only then can we effectively manage and complete the transactions that we deal with," she said.
Commissioner General Regina Chinamasa this week gave a candid assessment of the authority's challenges, citing the untraceable nature of cash transactions, limited investigative capacity, and evolving business structures as major obstacles undermining revenue mobilisation efforts.
"The cash economy makes it difficult to enforce some of the tax rules," Chinamasa admitted. "The level of disputes we are seeing speaks to the non-traceability of transactions and limited capacity for audits and investigations. We need to continuously realign ourselves to developments on the ground."
While she refrained from naming specific companies, insiders confirm that protracted tax disputes with corporate giants such as Delta Corporation and Innscor Africa have highlighted glaring enforcement gaps.
Delta, Zimbabwe's largest brewer, is embroiled in a multi-million-dollar dispute with ZIMRA over alleged under-declarations linked to extensive cash sales. Innscor, the country's leading food and retail conglomerate, faces similar battles over tax assessments tied to its cash-heavy retail operations.
"These corporate disputes highlight what ZIMRA has warned about for years - the cash economy creates blind spots, even among the largest taxpayers," said a senior tax consultant. "If companies like Delta and Innscor struggle, imagine the scale of the problem in the informal sector."
Over 70% of Zimbabwe's transactions are estimated to occur outside formal banking channels, leaving large portions of economic activity invisible to tax authorities.
Despite these challenges, ZIMRA reported collecting ZWG76.4 billion in the first half of 2025, slightly above its ZWG75.9 billion target. Chinamasa attributed this performance to intensified enforcement, tax base expansion, and strategic policy interventions.
ZIMRA has set an ambitious US$7.155 billion revenue target for 2025 but experts warn that without decisive steps to tackle informality, cash reliance, and corporate non-compliance, the goal may remain elusive.
The authority's voluntary disclosure drive for smuggled vehicles, offering a one-month amnesty period for owners to regularise their status, is part of efforts to plug revenue leakages.
ZIMRA is also banking on technological innovations, including artificial intelligence (AI), to identify non-compliance and accelerate enforcement.
"The digital trajectory is a game-changer. AI helps us pinpoint non-compliance and expedite enforcement processes," she said.
However, critics remain sceptical, arguing that without broader economic reforms to formalise the vast informal sector and reduce cash dependence, technology alone cannot resolve enforcement challenges.
Independent economist Gift Mugano commented, "Digitalisation is good, enforcement is good, but when 70% of your economy operates informally and relies on cash, you're fighting an uphill battle."
Meanwhile, the high-profile tax disputes with Delta and Innscor have reportedly sparked unease among other large corporates, who fear increased scrutiny as ZIMRA steps up sector-based audits.
"The message is clear: no one is immune. But the real question is whether ZIMRA has the capacity to follow through, given the complexity of some corporate transactions," said a Harare-based tax expert.
While surpassing revenue targets offers some optimism, experts warn that systemic issues - including limited audit capacity and the persistence of a cash-driven informal economy - threaten Zimbabwe's long-term fiscal stability.
As Commissioner General Chinamasa concluded, ZIMRA must remain agile, technologically equipped, and adaptive to navigate the complexities of Zimbabwe's economy.
"We need to continue to be aligned to developments that are happening. Only then can we effectively manage and complete the transactions that we deal with," she said.
Source - Business Times
