eBusiness Weekly
Africa Moyo
Companies and individuals are set for a significant tax relief in the coming year as Government is considering reducing the rate of penalties and interest levied by the Zimbabwe Revenue Authority (Zimra) on defaulting tax payers.
Apart from reducing the tax burden on taxpayers, the move is designed to encourage tax payments, in line with Government’s thrust of “moving towards sustainable taxation” as captured in the 2019 National Budget.
This was said by the Permanent Secretary in the Ministry of Finance and Economic Development, George Guvamatanga in Harare yesterday in a speech read on his behalf by the ministry’s chief economist, Kudakwashe Mudereri, during a media briefing on Zimra’s five-year strategy.
“ . . . my expectation is that Zimra will play a leading advisory role in the development of simple and sustainable tax policies which include reduced penalties and interest,” said Guvamatanga.
“Furthermore, it is important that Zimra deepen revenue collection through improved voluntary compliance.
“This would be achieved through co-operative compliance programmes and efficient risk-based audits and tightened compliance enforcement strategies.”
The decision to lower tax penalties and interest comes at a time Zimra is battling to collect the $4,5 billion tax debt that companies and individuals are struggling to pay.
Of the $4,5 billion debt, the principal owed constitutes 52,6 percent while interest and penalties are 47 percent. The penalties and interest continue to accrue despite the clearest indications that the taxpayers are either unable or unwilling to pay their obligations.
Move to motivate companies to pay
Some companies are understood to have deliberately closed shop to duck the tax bill, hence Government’s desire to ensure that tax complaint companies are rewarded through lower interest and penalties.
The private sector owes Zimra $3,6 billion representing (80,45 percent of the total debt) while parastatals owe $604,6 million (13,43 percent) and councils $275 million (6,11 percent).
In the 2019 Budget, Finance Minister Professor Mthuli Ncube, said it was critical to reduce penalties and interest and “also nurturing business to comply with the tax law, enhance capacity to pay their tax dues and remaining operational in order to produce, export and create employment”.
Need to widen tax base
Meanwhile, Guvamatanga said Zimra should work out plans of increasing the number of tax payers, to boost revenue generation.
“It is also important that Zimra widen the tax base by bringing in new tax payers onto the tax register, which will go a long way in assisting Government in reducing the budget deficit,” said Guvamatanga.
He added that it was crucial for the national tax collector to “develop and implement” strategies to plug revenue leakages.
The Transitional Stabilisation Programme (TSP), speaks to the need to plug revenue leakages through eradication of corruption, transfer pricing and illicit financial flows, tax evasion and avoidance practices, smuggling and money laundering and unethical procurement practices.
Added Guvamatanga: “ . . . ill-gotten wealth like corruption is a menace and threat to socio-economic development. We cannot have a situation where a few rich individuals who do not pay taxes are sustained by hardworking individuals who religiously pay taxes.”
Through Statutory Instrument 246 of 2018, Government may issue an unexplained wealth order in respect of properties no full disclosed.
Zimra Commissioner General Faith Mazani, said they will aggressively carry out life-style audits to fish out individuals that acquire ill-gotten wealth.
Rich people that also don’t pay taxes will be targeted.
