ZIMRA closes in on tax-cheating dealers…Dealers use false declarations to evade import duty …Fuel tankers among goods smuggled at borders …Serving and former ZIMRA officials involved in rackets

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Long lines of trucks wait to be cleared but many owners of the cargo are presenting false documents as they cheat on taxes.

By Golden Sibanda
The Zimbabwe Revenue Authority (ZIMRA) is closing in on business rackets and dealers who have defrauded the government of over a billion dollars by avoiding paying tax on imports, including on massive fuel imports for resale, the organisation’s chairperson has warned.

The state was losing potential revenue through well-schemed tax fraud involving serving and ex-ZIMRA officials suspected to have facilitated massive smuggling and false declarations of dutiable imports, Willia Bonyongwe told Business Weekly.

ZIMRA has since instituted massive investigation into the suspected cases of tax evasions, with the authority already having recovered half of the $120 million of cases currently being probed, she said.

Mrs Bonyongwe declined to name companies and individuals suspected to be involved in the tax evasion deals, saying this would jeopardise ongoing investigations.

But she said that ZIMRA was gathering evidence and where recovery of the money due to the state revenue collector failed, the authority would sue the suspects.

“(The tax evasion amount) It runs into billions of dollars. For example, the reduction in transit fuel cargo by 67 percent (since introduction of electronic tracking) is huge. We are in the process of making estimates.

“In one instance a clearing agent was assessed above $600 000, which was only for a few trucks. As such, these leakages are huge,” Mrs Bonyongwe said.

ZIMRA launched the latest investigation following evidence gathered from a small sample pointed to a possible massive racket in the clearing of dutiable petroleum products such as petrol, which for a long time was being falsely declared as non-dutiable Jet A1 fuel.

Business Weekly has it on good authority that part of the comprehensive audits includes sniffing on oil imports.

According to the ZIMRA chairperson, most fuel dealers retailing petrol below $1,10 per litre were likely selling fuel that evaded or avoided paying tax in one why way or the other with significant evidence already existing of cases where the commodity was imported as non-dutiable Jet A1 fuel.

Mrs Bonyongwe said that the remarkable decline, 67 percent, in transit cargo since electronic cargo tracking was implemented in May this year showed that all such trucks were carrying smuggled goods. She said while cases of cargo valued $120 million were being assessed, the leakage was potentially bigger.

Earlier, ZIMRA said in its half year report, showing 8,5 percent surge in collections to $1,7 billion on strong tax enforcement measures, audits and controls, that annual collections could top $6 billion if all tax payers complied and all forms of corruption, evasion and tax avoidance were nipped out.

Finance and Economic Development Minister Patrick Chinamasa’s 2017 National Budget projected revenue collections of $3,7 billion and expenditures of $4,1 billion, but the resources remain far short of requirements with 93 percent of total collections going to consumptive expenditure.

According to ZIMRA, petrol imports were declared as Jet A1 fuel because it was exempt from paying import duties and preliminary investigations from tip-offs unearthed massive cases of consistent and systematic tax evasions including over 100 trucks, which escaped the authority’s dragnet.

The value of the contraband, sources say, runs into several millions of dollars and was not part of the $120 million ZIMRA says was not remitted with some of the money from the slippage already recovered.

Audits have revealed that staff and ex-officials of ZIMRA, some of whom work for clearing agents, were part of the underhand schemes which helped importers to circumvent customs authorities and to pay grossly discounted tariffs on imports.

Most cases came to light after whistle blowers; using ZIMRA’s hotline exposed a litany of potential cases of tax evasions running into millions of dollars. Half the cases were successfully investigated, implicated staff and resulted in 21 suspensions while three of the involved officials were expelled, she said.

“All this is proven from audits. It is not just from first half of 2017. All of it is from hotline reports, half of which have been fully investigated; the rest are still under investigation. We cannot name them; however, they get reported to police,” she said in response to Business Weekly inquiries.

Though ZIMRA said there had been 67 percent decline in transit cargo entries after introduction of electronic cargo tracking, signifying the existence of rampant false declarations of goods destined for the local market, which saw increase in duty paying cargo, tax evasion and avoidance remained high.

This comes as the revenue authority indicated last week that there also was resistance among some of its staff to the electronic cargo tracking system, which was adopted in May this year, with less than 10 percent of cargo trucks entering Zimbabwe being secured through e-sealing at ports of entry.

“Resistance from staff is very common everywhere where cargo tracking is concerned. Forbes (Border Post) is doing quite well.

“We are also going to seal every transit tanker from the National Oil and Infrastructure Company. We are going to deal with Beitbridge staff resistance because they are benefitting. As we reported, there was 62 percent decline in transit fuel traffic (since introduction of electronic cargo tracking,” she said.

Hot stuff

Mrs Bonyongwe said the ZIMRA hotline was bringing information ranging from smalls busts to big deals such as false declarations of petrol imports.

The highlight was when a whistle blower called the revenue authority and informed it that there were trucks carrying petrol, which had been declared to ZIMRA as Jet A1 fuel, because the latter was not subject to import duty.

“It was true that there had been false declarations. ZIMRA officials looked into clearance by some customs agents and discovered more trucks, which investigations showed to be similarly fraudulent.

“They checked all fuel imports and found that there had been a spike in the last six months. They found about 100 suspicious cases of jet A1 fuel declarations,” she said.

Mrs Bonyongwe said that the revenue authority suspected that well-knit schemes to evade paying tax involved ZIMRA officials or former workers.

She said that where such irregularities are proven the perpetrators would be disciplined in line with the ZIMRA code of conduct, which has already resulted in dismissals for three staff members.

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