OF late, there have been numerous letters complaining of alleged poor service by the Zimbabwe Revenue Authority (Zimra) at border posts and acts of impropriety by tax officers. Last week the Zimbabwe Independent (ZI) sent questions to Zim
ra seeking clarification on various issues raised by our readers and received the following responses from the taxman.
ZI: There has been a deluge of letters alleging that there is rampant corruption at ports of entry, especially Beitbridge and Nyamapanda. How do you gauge the gravity of the problem and what is Zimra doing to minimise incidents of corruption?
Zimra: Zimra is and has always been committed to wiping out the scourge of corruption from its operations. Zimra tackles the issue of corruption internally and externally. The following steps have been undertaken to deal with this issue at our border posts:
*Post clearance audits are conducted on a regular basis in respect of all goods imported into the country. This has yielded very positive results. While someone might think they have escaped the net at the actual border, the audit eventually catches up with the perpetrator(s) and goods are often seized and sold at public auctions with the perpetrator(s) brought to book.
*Increased border patrols have been taking place at most border posts whereby Zimra, alongside security agents, conduct foot and vehicle patrols to curtail smuggling and other corrupt practices.
*The whistleblower initiative has yielded excellent results in that anyone supplying information on illegal activities realises a ten percent (10%) reward from the monies recovered as a result of the tip-off. Information received is kept in the strictest of confidence and the identity of the whistleblower is not disclosed to protect that person. In 2004 alone, over $337 million was paid out to informants and $3,4 billion was recovered on behalf of the fiscus.
*The recent change in the registration and supervisory regulations of clearing agents is also designed to combat corruption. Bona fide clearing agents must go through a thorough vetting process before being accredited and registered. This should see a significant decrease in the amount of bogus agents who contribute to the confusion and corrupt practices at some of our stations.
*Zimra practises “zero tolerance” for corruption and as such any cases that are unearthed and brought to our attention are swiftly and effectively dealt with. Our code of conduct leaves no room for staff members caught on the wrong side of the law. Disciplinary measures are taken within the law and dismissals occur and the offending staff member is turned over to the authorities for the law to take its course.
ZI: You have always stated that you have met your revenue targets as set by the government. How much has the fiscus been prejudiced of through corruption? Please give a figure and state whether it is based on any comprehensive study.
Zimra: While we accept that there evidently has been some prejudice to the state in terms of revenue collected arising from corruption and tax avoidance, this is not unique to Zimbabwe. It is difficult to give an exact figure, because of the nature of the practice of corruption. Suffice to say that the loss is not material due to the frequent recoveries achieved.
ZI: There is a serious problem of touts at Beitbridge and sometimes one cannot differentiate between them and Zimra staff. Why has Zimra failed to deal with the problem?
Zimra: We acknowledge the presence of touts in Beitbridge. It is hoped that some of the measures referred to above, vis-à-vis clearing agents, will help curtail some of this activity, in particular the stringent registration requirements for clearing agents. Zimra staff can be identified by their Zimra uniform and identity cards. Clients should always ask for the Zimra identity card to be displayed and are encouraged not to conduct business with a person who does not possess one.
ZI: There are also allegations that corruption is rampant among Zimra staff who have told the Commissioner-General Gershem Pasi that they engage in the unsavoury practice because of poor remuneration. Has this communication been sent to the Commissioner-General and what is being done about it? Is it true that Zimra staff are poorly remunerated compared to other civil servants?
Zimra: The Commissioner-General has not received any communication of this nature. Zimra has since inception, been committed to improving the general conditions of service of its employees.
Issues of remuneration of staff are dealt with bi-annually in the form of collective bargaining negotiations held between management and worker representatives. Zimra values its staff highly and considers the remuneration to be competitive within prevailing market rates. Zimra also has to balance the interests of the tax-paying public, the fiscus and its employees.
ZI: We have also heard that senior Zimra officials acquired Zimra vehicles at book value in a scheme that excluded junior and middle management staff. Could you please comment on this?
Zimra: Zimra has a vehicle policy in place that benefits all employees. Those Zimra managers who acquired vehicles did so transparently and through an approved loan scheme.
ZI: There are also allegations that senior staff members have been given housing loans in a scheme which also excluded junior staff. Please comment.
Zimra: Zimra has a housing loan policy in place that benefits all staff members across the board. The level of benefits depends on the grade of each staff member, the availability of funds and that staff member’s ability to repay the loan. This is in line with industry practice.
ZI: Are Zimra accounts audited by the Comptroller and Auditor General. If so could we have access to the reports?
Zimra: Zimra’s accounts are audited by the Comptroller and Auditor General. The audited accounts are confidential in line with world-wide practice.
ZI: Zimra has introduced a new withholding tax regime which has been roundly criticised by “experts” who believe that it is not implementable. Could you please explain what this tax scheme entails and why Zimra thinks that it is necessary.
Zimra: I question your reference to “experts” who believe that this system is not implementable. There are numerous tax heads which are subject to “withholding tax”. It is not clear which particular tax head is viewed as being “not implementable”. The reality is that a “withholding tax” regime is a very effective system that allows taxpayers to be far more compliant than they have been in the past as far as paying their taxes is concerned. This policy is effective immediately.
Our ability to meet or exceed challenging revenue targets lies partly in improving tax collection efficiencies and closing current loopholes in the system.
This is one such move which we believe will yield positive results as far as revenue collection and transparent administration of the tax system is concerned.
ZI: We hear there is a new tax system to be implemented soon. What does it entail and how does it enhance revenue collection?
Zimra: I take it that you are referring to the revised method of corporate entities remission of taxes. Previously businesses were required to pay their taxes in arrears, that is taxes incurred in 2003 would only be due in 2004 etc.
In his budget statement, the acting Minister of Finance and Economic Development Herbert Murerwa changed this method of paying tax such that businesses would be required to start paying their taxes in the current year. The changeover has however been staggered over two years so that companies are not saddled with a cashflow crisis. Please refer to page 45 of the Minister’s 2005 National Budget statement for clarification.
This is in keeping with global trends and is generally accepted as a more efficient way of doing business.
ZI: There are allegations that resettled farmers are not paying tax, as Zimra does not have a scheme to collect the revenue. Is it true that new farmers are not paying tax? If so what is the estimated prejudice to the fiscus? If they are paying tax, how much has been collected from them?
Zimra: Farmers have always been taxed much like any other business entity. They contribute tax under the various tax heads, including VAT, PAYE and Income Tax. In line with the government’s agrarian reform project, however, studies are currently taking place which look at the taxation of new farmers and how they can contribute more positively to the fiscus.
ZI: There have also been allegations that companies owned by Zanu PF and others belonging to Zanu PF officials are not paying tax. Is this true? Please comment.
Zimra: All registered companies are required to pay tax irrespective of political affiliation. Any company found on the wrong side of the law is liable to pay the requisite tax plus penalties and fines. Tax crimes are prosecutable. We urge anyone with information on known tax avoiders or defaulters, to come forward. We will gladly take up the matter without fear or favour.
ZI: The Commissioner-General has been accused of abusing Zimra vehicles. Could you please comment?
Zimra: Zimra has a stated motor vehicle policy which clearly outlines how authority vehicles are to be used. In line with good corporate governance and under the guidance of a highly competent board of directors, there has been no breach of said policy by the commissioner-general. These allegations are mischievous, unfounded and grossly untrue.