60% of Zimbabwe's taxpayers in default

60% of Zimbabwe's taxpayers in default
Published: 05 July 2018
The Zimbabwe Revenue Authority (ZIMRA) has been hit by low tax compliance levels as 60 percent of registered taxpayers are not remitting their dues, a senior official said.

ZIMRA commissioner-general Faith Mazani  said in a country of about 15 million, not more than 300 000 taxpayers are registered while only 40 percent are active taxpayers.

She said ZIMRA is now owed $4 billion in unpaid taxes as at end of May this year, up from $2,5 billion in March last year.

"Right now ZIMRA is sitting on a debt of $4 billion because we allowed some businesses to operate without paying taxes," Mazani said during a recent stakeholders breakfast meeting.

Of the 511 000 tax returns expected to be submitted in the first quarter of the year, compliance levels stood at 23 percent and 39 percent for the Pay As You Earn and Value Added Tax, respectively.

Lamenting that this had created a situation where the few compliant taxpayers now carry all the tax burden, forcing them out of business, Mazani said: "The level of tax compliance in Zimbabwe is among the lowest on the African continent. Many taxpayers are not on the ZIMRA tax register. And of those who are registered, we realised that very few are compliant. This situation results in very few taxpayers carrying the burden of those who are not complying. We urge all those who are not complying to relieve the tax burden on the few that are paying."

The tax collector has been making use of full remission of penalties and in some cases, interest, to try and encourage tax compliance.

While the tax collector has bemoaned low compliance levels, it is interesting to note that it has been surpassing its monthly and annual revenue collection targets.

A cross-section of taxpayers from the manufacturing industry to the insurance sector accused ZIMRA of squeezing companies out of business.

Taxpayers lamented that ZIMRA's tax regime was anti-capital and promotes non-compliance.

"The whole culture in ZIMRA should change. In Zimbabwe, unlike other countries, if you have a (tax) refund (from ZIMRA) it's as if you have committed a crime, because the taxpayer is reluctant to refund. It is that culture that creates non-compliance. But if ZIMRA is excited to pay me a refund, it creates a spirit of togetherness. Also, interest rates on overdue taxes are too high at 10 percent when the borrowing rate is below 7,5 percent. Traditionally the interest rate on overdue tax has been lower than the borrowing rate, so it should go down to around 5 percent or even 3,5 percent. We are hopeful this will be done before July 30," said Tanganda Tea Company finance director Henry Nemaire.

Willowton Group chief executive Bruce Hernandez concurred, and added that the "100 percent tax penalty is too much".

Mazani acknowledged that their taxing regime was driving many potential taxpayers away.
- fingaz
Tags: Zimra,


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