The Sunday Mail
Darlington Musarurwa : Business Editor’s Brief
| PORING over statistics from the Zimbabwe Revenue Authority, one cannot help but notice an outstanding feature: money collected from value added tax levied on local sales during the first quarter of 2016 exceeded collections made during the same period last year by more than US$23,3 million. |
In fact, VAT on local sales was the only major tax head to perform positively during the period, though collections were below target.
By its own admission, Zimra believes overall poor revenue collections have been caused by non-compliance by taxpayers, corruption and lack of complete automation.
But, Eureka! The taxman has since found a formula to reverse this negative trend — it involves automating the system through fiscalisation.
Well, fiscalisation essentially entails introducing electronic fiscal devices (EFDs) — machines designed for use in businesses for efficient management controls in areas of sales analysis and stock control system — such as electronic tax registers (ETRs), electronic fiscal printers (EFPs) and electronic signature devices (ESDs).
These devices are designed to capture all sales information and automatically re-route it to the tax authorities who in turn are able to see how much they are owed by companies.
Quite bizarrely, Zimra says it “will also soon complete the fiscalisation process it started in 2010”. Really? A full six years after the process began?
This is disingenuous from the taxman.
Since the project started, The Sunday Mail Business in particular has been prodding the tax authorities to expeditiously implement it, more so in an environment where revenues are declining; including raising the red flag in instances where there seemed to be reluctance to progress.
In a May 4, 2014 article entitled “Fiscalisation project stalls”, this newspaper highlighted with concern how the whole project had seemingly been put on the back-burner.
And now, when Government is finding it difficult to meet its basic obligations, Zimra thinks it is the best time to speed up the process.
“All things being equal,” Zimra said in a statement accompanying its first quarter revenue performance, the Authority will be able to “meet its 2016 targets by Q3 (third quarter or Q4 (fourth quarter) at the latest”.
Through Zimra’s sloth and delays, Government has arguably been prejudiced of a lot of money.
In 2011, a study conducted by the African Forum and Network on Debt and Development, an NGO, railed against the Zimra for failing to effectively monitor business transactions.
It is worth noting that Tanzania, which also began its own project just at the same time as we did in 2010, has made significant demonstrable progress.
The Tanzania Revenue Authority says its tax collections rose 9,6 percent between 2010 and 2011 and rose 23 percent from 2011 to 2012.
By 2014, TRA was forecasting monthly collections of more than US$370 million, up from US$250 per month, due to the expanded use of the electronic tax register.
The jump in revenue collections from VAT on local sales in the first quarter therefore gives credence to claims that tax authorities could have harvested more from retailers in the past six years.
This is also despite the fact that Government at one time in 2014 Government was spending close to US$10 million per month in VAT rebates since fiscalisation was made legally enforceable by gazetting Statutory Instrument 104 of 2010 on June 8, 2010.
Even for the few big retailers that complied at the time, not all of their terminals had fiscal tax devices.
On May 14, 2014 — exactly two years ago — Tanzania actually moved to the second phase of its fiscalisation project that was targeted at small retailers.
This is an indictment on our own local systems that are horribly lagging behind.
But it does not only end with fiscal devices.
Zimra’s lethargy in introducing the electronic cargo tracking system (ECTS, despite the fact the country has local companies that are capable of supply the technology, is equally worrying.
In the 2010 National Budget, Treasury mulled introducing the ECTS on April 1, 2010.
Government had identified transit cargo as a high risk to revenue security since it constitutes a significant volume of customs transactions.
The bulk of such cargo remains un-acquitted. Through a system of electronic seals and transmitters, the ECTS are designed to monitor transit cargo because there was belief that cargo purportedly destined for other regional countries was being offloaded on the local market; hence, evading duty in the process.
There is plenty of evidence to suggest that this is true. Last month, 26-year-old truck driver Mandlaenkosi Dube appeared before Harare magistrate Tendai Mahwe for carrying smuggled goods worth more than US$131 000.
The goods included 296 sealed bales of second-hand clothes and 32 bales containing second-hand shoes.
There are a lot of instances where trucks are used as mules to smuggle all manner of goods onto the local market.
Honestly, this is a cause of concern as it seems that the taxman, through stubbornness and arrogance, is complicit in all this. And, surely, someone has to be liable for being criminally incompetent at Zimra.
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