By Phillimon Mhlanga
THE Zimbabwe Revenue Authority (ZIMRA) is contemplating legislative measures to ensure severe penalties to tax evaders in a bid to force compliance and boost revenue.
ZIMRA board chairperson, Willia Bonyongwe, last week disclosed that current penalties were not deterrent enough, a situation that had resulted in a surge in repeat offenders.
“Penalties are meant to deter undesirable behaviour, but current ones do not appear to be deterrent enough,” Bonyongwe said during a BDO Zimbabwe Chartered Accountants’ business and tax seminar held in the capital.
“We have a lot of repeat offenders. As the country’s tax collector, we are currently lobbying for more severe penalties. The proposed legislation should see offenders sent to jail, like what’s happening in other countries. This will be better. I can tell you that we are losing a lot of money as a nation. Africa as a whole is losing about $6 billion a year in tax evasion.
“Penalties are an unnecessary cost to business and should be avoided by complying with fiscal obligations,” she said.
Bonyongwe said ZIMRA, which was a government tax collection agent, had intensified efforts to collect more revenue by enforcing several measures.
She said: “We have realised that our enforcement measures are weak. As a result, we found out that compliance is also low. Therefore, we have intensified our compliance checks to verify whether taxpayers are up to date with their tax obligations. We have come up with post-importation audits to confirm whether imported goods were properly cleared.”
ZIMRA has also intensified tax audits and these were going as far back as six years.
She said ZIMRA had also heightened efforts to force companies to fiscalise, a move which is expected to assist in curbing transit fraud, smuggling and illegal dumping of goods on the Zimbabwe market.
Zimbabwe’s economy has become largely informal, making it difficult for ZIMRA to collect taxes.
Many companies have closed and many more continue to shut down due to operational challenges, reducing the tax base.
In the first half of the year, gross collections stood at $1,789 billion, some eight percent above the target of $1,656 billion. For 2017, Zimbabwe is targeting revenue inflows of $3,7 billion but ZIMRA said with increased levels of compliance, revenues have the potential to reach $6 billion annually.
The bulk of Zimbabwe’s revenue collections come from individual tax followed by excise duty.
Corporates are the highest defaulters accounting for a huge chunk of the $3,12 billion tax debt as at June 30, 2017. The Financial Gazette