28 September 2012

Zimbabwe: Zimra in Campaign for Tax Compliance

THE Zimbabwe Revenue Authority (ZIMRA) has embarked on a drive to increase revenue inflows into the fiscas following a disappointing first half of 2012 in which the tax collector reported a string of negative variances.

Customs duty led the list of negative variances at -10 percent, followed by individual taxes at -3 percent and Value Added Tax (VAT).

Net inflows during the first half ended at US$1,495 billion against a target of US$1,5 billion, representing a -0,34 negative variance.

In the campaign, ZIMRA highlighted the economic benefits of tax compliance and discouraged tax evasion, smuggling of goods at borders, corruption and other underhand dealings.

"I am fully supportive of the agenda to promote economic development and preservation of the country's dignity through efficient tax system," part of the campaign reads.

"The taxes I pay promote the provision of social services like health, security and education, and guarantee a prosperous future for my children and grandchildren. I am therefore, totally against non-compliance," says ZIMRA.

Inefficiency by ZIMRA staff at border posts where travellers and transport companies endure long periods of waiting, sometimes over 24 hours, before clearance has stimulated a vibrant underground system that usually benefits the officers rather than the State.

People pay through the back door to either evade the high customs duty or to fast track their travel.

The rampant corruption, mostly blamed on ZIMRA officials at points of entry, has hit hard on the revenue collection body's capacity to deliver.

"They must address these issues first," a tax expert said this week.

ZIMRA has also failed to widen its net enough to include the informal sector, which is estimated to account for over 50 percent of the country's Gross Domestic Product, into the tax remittance system.

During the first half of 2012, ZIMRA said a large portion of the inflows was realised from VAT, individual taxes and excise duty, which contributed US$497,2 million, US$299,7 million and US$175,4 million respectively.

With unemployment levels as high as 70 percent and companies battling to survive under a hostile environment highlighted by acute cashflow problems and high interest rates, the taxmen has been battling to collect enough revenues to run government, and the results have been significant reviews to 2012 growth targets.

In May, ZIMRA said it was introducing a new electronic system that would connect it with the information technology systems of all companies and organisations as part of measures to curb revenue leaks.

The new system was expected to ease payment of taxes as ZIMRA would be working with actual figures.

As part of measures to curb corruption within its ranks, ZIMRA also engaged the Zimbabwe Prison Services for orientation of its recruits on conditions in prisons to deter its staff from engaging in illegal activities.

Presenting evidence to the Portfolio Committee on Budget, Finance and Investment Promotion, ZIMRA commissioner general, Gershem Pasi said the new system would help curb leaks from the mining industry.

"When you look at returns from the mining sector to the fiscus, it doesn't match, even in tourism it's the same, that is why we want to link up with everyone," said Pasi.

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