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ZIMRA offices

Simiso Mlevu Senior Reporter
Zimbabwe could have lost hundreds of millions to tax fraud in 2016, according to details in the Zimbabwe Revenue Authority’s 2016 annual report.

Value added tax (VAT) was among the key matters arising in the audited report on grounds there was a presumed risk of VAT refunds to false input tax claims by clients.

“During the period under review, VAT on goods and services refunds amounting to $211 599 592 was processed by the authority and this amount was significant to this return,” noted the Auditor general’s office.

VAT is an indirect tax on consumption which is charged on the supply of taxable goods and services and is levied on transactions rather than directly on income or profit as well as on the importation of goods and services.

Zimra told The Herald Business that VAT is on the Self-Assessment System, which implies that the taxpayer declares (and pays) the tax due voluntarily, leaving room for manipulation.

There is potential revenue loss in cases where the taxpayer either under-declares Output Tax or over claims Input Tax. However, Zimra has put in place several measures to enhance revenue collections and plug any loopholes which might exist in the collection of various taxes, including VAT,” Zimra said.

Zimra said The Fiscalisation Programme, under which all VAT registered operators are expected to install fiscal devices and connect them to the revenue collector’s server, is meant to monitor business transactions real-time to curb any under-declarations by clients.

Zimra also introduced Value Added Withholding Tax, which is a tax withheld by appointed agents when they pay their suppliers for the acquisition of taxable goods or services, with effect from 1st April 2017 to enhance VAT collections.

“Zimra also continuously carries out enforcement activities, audits and compliance checks to verify whether clients are making accurate declarations and payment of requisite taxes and duties on time and in full,” said the authority, adding that it runs a whistle-blower’s facility under which any individual who provides specific information which results in the recovery of revenue will be entitled to 10 percent of the recovered amount.

“Clients can also report tax and duty corruption on the toll-free hotline, which is managed by an independent service provider. The contact details for the anti-corruption hotline are as follows.

In the year under review, Zimra collected $3,5 billion which was 96 percent of collection targets.