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ZIMRA widens tax dodger dragnet

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The country’s tax collector, the Zimbabwe Revenue Authority (ZIMRA), has intensified its pursuit of corporate tax  dodgers estimated to be more than 60% of the country’s registered taxpayers.

It is estimated that ZIMRA is owed close to ZWL$5bn  in unpaid taxes  by several companies.

Consequently, ZIMRA is now descending heavily on tax dodgers as the government is heavily reliant on tax collections  to fund its operations due to lack of budgetary  support from the donor community.

Multiple sources at ZIMRA told Business Times this week that the tax collector was widening the tax dragnet  to swoop on tax evaders.

They said ZIMRA will go for full enforcement  to bring the companies into the tax net.

 “There is a resolution to aggressively apply several measures including intensifying tax audits, raiding companies bank accounts through garnishee orders  and chasing third parties such as taxpayers debtors,” one source told Business Times this week.

All efforts to get a comment from ZIMRA commissioner, Regina Chinamasa, were futile.

Recently, ZIMRA raided platinum miner, Unki Mine’s bank account  and seized US$24m .

ZIMRA said Unki was underpaying mining royalties.

Tax experts said raiding companies’ bank accounts has adverse effects on organisations.A tax expert Marvelous Tapera said the government should amend the current tax law.

“There is a controversial method for computing the tax which requires payment  to be done in foreign currency. But, how do we split it when someone is trading in both local currency and United States dollars?” asked Tapera.

 “So the solution is to amend the tax laws so that it has more clarity.”

A tax lawyer and corporate advisor, Fungai Chimwamurombe, told Business Times that tax compliance was low as companies  were overburdened with operational costs as well as over taxation.

“The companies are burdened by operational costs to an extent that they then overshadow the aspect of corporate tax which is payable to ZIMRA.

“The companies are focusing much on at least minimum compliance. So, if you look at a company that is paying PAYE for its employees there is some confidence it’s contributing something to the government. That brings some false confidence or false satisfaction and the corporate tax is neglected,’’ Chimwamurombe said.

He also called for the amendment of the tax regime so as to reduce the burden of taxes on corporations.

“Lets not split hairs in terms of taxes. Currently we have too many taxes under different umbrellas. It makes it difficult for companies to comply.

“More so, I know the government might not be comfortable with this but the corporate tax should be a part of profit and not turnover because we have been through a lot as a country. Corporates are burdened with loans they took during the pandemic period to sustain operations,” Chimwamurombe said.

As ZIMRA has employed garnishing as a tool to enforce compliance financial analysts are of the view that the move deters investors, as the country does not have a not so clear tax regime.

Zimbabwe is highly informalised and with the growth of the informal sector has resulted  in many businesses operating outside the tax collector’s radar.

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