The Sunday Mail
MATTHEW 22 vs 21 says: “Render therefore to Caesar the things that are Caesar’s and to God things that are God’s.” This verse simply advises us to be good law-abiding citizens who dutifully pay their dues to society, while at the same time giving to God what belongs to Him.
It is surely a good practice to be paying all our statutory obligations, but, from experience, I have learnt that most companies are reluctant to pay them.
Instead, they default and create huge liabilities with statutory bodies.
Is it because they simply do not want to pay, or, maybe, the payments are too steep?
In Zimbabwe, companies have to contend with payments to institutions such as Zimbabwe National Revenue Authority (Zimra), National Social Security Authority (NSSA), Zimdev, Government ministries and local authorities.
Usually payments to Zimra include Pay As You Earn and the Aids Levy, which are paid before the 10th of every month.
Value Added Tax is often paid every two months; dependent on the category the business is in.
Also, local regulations stipulate that about 1 percent of total salaries and wages bill is remitted to Zimdev monthly, while a cumulative 7 percent – 3,5 percent from the employer and the other half from the employee – of the same wage bill is paid to NSSA.
Funds that are paid to local authorities are mainly for licences and depend on the type of business that one is engaged in.
When you decide to work with Government, there is vendor number that you need and is renewed annually, and to participate in tenders you will additionally need to register and pay fees to the State Procurement Board, which is also an annual process.
And if you are in mining, there are several fees you will need to pay to operate.
After all the above statutory payments, you will also need to pay utility bills to the Zimbabwe Electricity Supply Authority and water charges to local authorities or Zinwa.
After taking into account all these obligations, one has to ask if it is actually the will of the companies to default payments or the system is just too punitive to be complied with by local industry.
Most companies are presently experiencing serious cashflow problems.
It is, therefore, unsurprising that a huge chunk of liabilities on companies’ balance sheet is owed to statutory bodies.
Without a doubt, companies are duty-bound to comply with local laws and regulations, but if there is a high rate of default, isn’t it prudent to investigate why and find practical ways to improve the situation.
Zimbabwe has faced significant economic challenges in the last 14 years and I personally feel that as a nation we need to refine our policies in order to create a favourable business environment and relieve distressed companies.
Clearly, some companies do not need huge capital investments but they simply need a way out of their current debt trap.
I believe that the current huge debts that companies owe to statutory bodies need to be massaged in order to ensure that there is a balance between the interest of firms and the interest of these Government entities.
Nowadays, if your company gets a visit from officials from Zimra, NSSA, Zesa and the City of Harare, then indeed you are in big trouble.
Those officials are some of the toughest individuals I have ever encountered!
They can have very menacing demeanours and they do not have time for jokes or pleasantries when they come to collect their dues.
But don’t be fooled: sometimes when these guys are offered a “token” their mean demeanour is quick to melt away, giving way to a cheerful grin.
This is the reason why some companies are still operating despite having mountains of debt.
The question is: How can we create a proper business environment where companies can afford to pay statutory payments on time?
Considering the paths most companies took in the last decade, don’t we need some form of relief programmes for distressed companies?
Many companies end up filing for judicial management to protect themselves from creditors.
On the other hand, while some companies are operating relatively well, they are simply reluctant to pay their taxes. They want to keep all the money for themselves.
Again, I will ask, how are we going to deal with this situation?
I had a conversation with a certain businessman who said to me: “Why should I pay taxes to cater for hefty salaries for these statutory boards whilst I starve my own employees and my own pockets to enrich other individuals?”
To an extent, he was justified as it is surely painful to note that the taxes we pay are being misused and abused by greedy, selfish and heartless officials.
I would recommend a thorough analysis of all Zimbabwean companies.
Zimbabwe has more than enough resources to do this exercise and that is the role of all the audit firms in this country.
Some of these issues are very simple and need simple solutions. It is disturbing to see companies continue shutting down where we can come up with solutions.
Consider how many people will likely lose their jobs simply because a company was shut down due to non-compliance.
I am certainly not encouraging companies to default on payments but all that is needed is for all parties to create balanced and favourable policies that boost and enhance company operations.
It is only through this way that companies can build up capacity to pay all their statutory obligations without any constraints.
Taurai Changwa is an Articled Accountant and ACCA finalist. He is the managing director of SAFIC Consultancy. He writes in his personal capacity and can be contacted at [email protected] or visit Facebook page SAFIC Consultancy, or WhatsApp on 0772374784.
