The Sunday Mail
Taurai Changwa
Business Forum
It is time to correct all the wrongs made in the past and Zimra must be part of that process.
As the country tries to make a determined break to some of the objectionable and rotten practices of the near past, Zimbabweans are duty-bound to ensure that they play their part in aligning their practices to the new dispensation.
Businesses, in particular, have to be given the opportunity to re-invest themselves anew.
While it is acknowledged that external lines of credit have dried up, statutory bodies should not wring this money from desperate and struggling companies.
In as much as we commend the Zimbabwe Revenue Authority (Zimra) for exceeding its revenue collection targets, it must be noted that high interests on debts and penalties, ironically imposed on struggling companies, are crippling them.
Many companies have a huge trade receivables age analysis, some of these trade receivables are even Government institutions which they do not charge interests on. There must be some sort of reprieve to companies which are owed by Government.
The VAT Act Section 39 (5) gives the Zimra Commissioner the power to waiver penalties and interests if the Authority is satisfied with the client’s case.
So, yes, Zimra does have the discretion to save some of the companies that are struggling for breadth.
It must be appreciated that the challenging economic environment has had a contagion effect on companies, with the result that most of the companies that are struggling are in fact owed a lot of money by fellow companies.
But it is the mechanical and callous way that Zimra applies these penalties that is worrying.
In most cases, Zimra continues to bill penalties at 100 percent, while interests continue to pile up as long as the debt in question is in the Zimra’s SAP system.
It is therefore not surprising that most companies now owe millions of dollars to the tax authority, even in cases where the actual outstanding principal amount is less than $300 000.
This is nothing short of irrational and Government surely has to intervene.
At a time when Government is looking at creating jobs, it does not help to continue closing firms that ordinarily can be salvaged.
Zimbabwe needs to promote an environment which promotes business growth.
Local tax policies definitely need to be revised.
Is it so much to ask that Government has to waive some of the penalties and interests owed?
Some of the matters have to be dealt with on a case-by-case basis.
Zimra is owed huge sums of money by companies and prospects for recovering such funds are remote as some of the companies have since folded.
Though Zimra must carry out its statutory mandate to ensure compliance with the law, it must avoid being heavy-handed.
It must be appreciated that at times it is not by choice that companies are struggling, they might be in the predicament they are in due to circumstances beyond their control.
Some business owners might not be conversant with the intricacies of tax laws, so at times they need to be schooled by the authorities rather than being punished.
And in cases where penalties are unavoidable, they have to be reasonable enough.
Some of the penalties imposed on business are too onerous for the businesses to survive.
In addition, there is need to re-look at the plight of companies that are undergoing High Court sanctioned recovery processes.
Zimra definitely needs to be lenient with such companies as they are still too fragile to be expected to fully comply.
Such companies are like patients that are in the intensive care unit.
If they are not given enough care, they might die.
There are countless companies that have been put under judicial management owing to various reasons.
For companies under court-aided processes, it is actually prudent to simply waiver the entire penalties and interests as this gives the company room to survive.
We need policies and reforms which can take our country forward and get rid of harsh stances which derail progress.
It is time to correct all the wrongs made in the past and Zimra must be part of that process.
Arguably, there are better ways for Zimra to collect revenues without unnecessarily inconveniencing companies.
It is time the tax man has a heart besides being a stickler to the law.
Decisions made have an impact on businesses and livelihoods.
We now need a Zimra that is responsive to the economy of Zimbabwe, a Zimra that is very decisive and efficient.
The Authority is key in the development of Zimbabwe and plays a huge part in economic transformation.
Taurai Changwa is a member of the Institute of Chartered Accountants of Zimbabwe, Certified Tax Accountant and an Estate Administrator. He has vast experience on tax, accounting, audit and corporate governance issues. He is a director of Umar & Tach Advisory. He writes in his personal capacity and can be contacted at [email protected] or whatsapp on 0772374784.
