11 July 2014

Zimbabwe: Zimra to Intensify Raids On Companies

THE Zimbabwe Revenue Authority (Zimra), which is under severe pressure from Finance minister Patrick Chinamasa to raise funds for the cash-strapped government at a time the country's revenue base is shrinking due to company closures, will intensify the garnishing of accounts of companies failing to pay taxes, a senior official revealed yesterday.

A Zimra official said the revenue authority was likely to continue garnishing accounts as a way of pressuring companies to pay up.

"Chinamasa has been under a lot of pressure to raise money and you will recall that the president publicly stated that he had asked him to resign if he was not capable of raising money for government operations. And after being put in a tight corner by the president, he in turn cracked the whip on Zimra, particularly Commissioner-General Gershem Pasi," said the official.

"This is the reason why company accounts are being raided. The demands are immense because many companies are struggling but we just have to find the money."

In an interview aired on ZBC in February to mark his 90th birthday President Robert Mugabe revealed he had threatened to fire Chinamasa when he told him he could not raise money to fund a salary hike for civil servants. "And so we must have normal salaries," Mugabe said.

"Yes, we cannot have them from day one, but we must have them on paper for a start and work towards their being fulfilled in practice. And that Chinamasa is doing. At first he said we could not do it and I said well if you can't do it tell me I will get someone to do it," Mugabe said.

There has been a huge outcry over Zimra's move to garnish accounts, with economists and industrialists arguing the move would hasten the demise of companies, most of which are barely surviving.

The issue was raised in parliament by Masvingo Central legislator Daniel Shumba last week where he accused Zimra of shrinking the economy through its actions. Shumba likened garnishing struggling companies to "killing the cow that we are milking".

"Mr Speaker, what is the policy of theMinistry of Finance and Economic Development regarding the inconsistencies of your departments, mainly Zimra, in shrinking our economy by the continued penalties that are levied to industries and other business sectors across the country, with respect to the development of the country and in particular, given that the government itself is impecunious and yet we continue to expect industry to perform miracles," said Shumba. "Companies are shutting down every day."

Deputy Finance minister Samuel Undenge defended Zimra's action saying it had a mandate "to collect revenue from each enterprise and from individuals".

There have been reports that cabinet had ordered Zimra to stop garnishing accounts but senior officials revealed they were not given the order, adding the only way the authority would stop was if the Revenue Authority Act Chapter 23:11 which governs Zimra's operations was amended.

"Such an order if it was ever made would be illegal because cabinet cannot make such an order without amending the law that governs the operations of Zimra," said a senior official.

"Besides, the government knows that garnishing accounts is the only way of forcing people and companies to pay their taxes, so we are likely to continue. The action we are taking is basically because we are desperate to raise money for the Treasury."

Zimra spokesperson Taungana Ndoro declined to comment on issues to do with revenue collection and Zimra operations when asked about the garnish orders and their impact on industry.

He instead gave what has become a standard statement from the director of legal and corporate services, Florence Jambwa, who stated that Zimra officers "are precluded by specific provisions within this law (Revenue Authority Act [Chapter 23:11) from providing specific information concerning its clients to third parties".

However, senior Zimra officials revealed the organisation was under a lot of pressure to raise money hence the unpopular move to garnish company accounts, which among other aims meant to force defaulting companies onto the negotiating table to pay their dues.

Another senior official said although there have been complaints Zimra was taking care to ensure that a company's performance is properly assessed by commissioners before a garnish order is issued.

He said normally after being garnished the companies approach the authority and work out a payment plan.

"During discussions we are very flexible and would not insist on a payment plan which is not feasible," said the official.

He revealed that many companies, especially those connected to powerful politicians had not paid their taxes since dollarisation in 2009. The companies, he said, often sought protection from politicians when raided by Zimra.

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