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Taxation is a national subject

BY TAURAI MANGUDHLA

TAXATION is a national subject that affects all citizens. It has never been more critical for the country than now given a shrinking revenue base, in hard currency terms, and growing demands due to the Covid-19 pandemic. The Zimbabwe Independent’s chief business writer Taurai Mangudhla (TM) interviewed Zimbabwe Revenue Authority (Zimra) acting commissioner general Rameck Masaire (RM) around the tax collector’s strategy for 2021 and how it relates to the general management of the economy. Below are excerpts:

TM: What is your general assessment of the economy and what are your prospects for 2021 as Zimra?

RM: The economy has generally stabilised due to timely fiscal and monetary reforms instituted by the government through the Ministry of Finance and Economic Development. Monetary policy interventions carried out in June 2020 and in the 2020 Mid Term Monetary Policy Statement have resulted in price and currency stability.

We remain confident we will continue to meet our revenue collection targets. However, the Covid-19-pandemic-induced lockdown has resulted in a slow start to the economy during the first two months of the year.

TM: Some companies are struggling to remain afloat due to Covid-19, what is the likely impact of this on tax collections?

RM:The government has permitted companies to open up and abide by WHO requirements. Therefore, we expect that going forward, businesses that were affected by Covid-19 will put together their operations to survive. The government has given the green light to the informal sector, which will go a long way in supporting the formal businesses.

We have also noted the arrival of vaccines and the possibility of companies acquiring the same, which brings confidence to business. Therefore, going forward the impact to tax collections will be minimised by the reopening of the economy and prospects for a better future. Indeed the lockdown resulted in reduced tax revenue inflows, a position that we are currently attending to in order to recover the outstanding tax revenue.

TM: Zimbabwe’s economy is predominantly informal and hence difficult to tax, what have you done to improve collections from the informal sector?

RM: Zimra has developed a compliance management framework, which among other issues covers the following areas:

  •  Ensuring that taxpayers and other parties understand their obligations under the revenue laws through educational workshops and publicity campaigns.
  •  Ensuring that the costs of compliance are kept to a minimum through improving tax simplifying systems, forms used to pay tax.
  •  Ensuring that incidents of non-compliance are effectively detected and dealt with, in ways that are proportionate to the behaviours encountered.
  • Encouraging voluntary compliance by taxpayers through engagement of the taxpayers and their associations.
  •  The Authority does some advisory visits, courtesy calls and processing of tax registration online, access of tax information, dissemination of the information online to reduce compliance costs. Enforced non-registration provisions.
  •  The Authority has engaged the business community in the informal sector extensively through meetings, workshops and other taxpayer education programmes. The engagement was through their associations, which made it possible to cover many businesses throughout the country. We have also utilised the print media, TV and social media to send messages.
  • Implementing the Comesa Simplified Trade Regime (STR) which enables small-to-medium traders to benefit from the preferential rates enjoyed by commercial traders when importing or exporting goods within Comesa member states. This regime covers goods of a value not exceeding US$1 000 and is operational between Zimbabwe and Zambia, and Zimbabwe and Malawi. The arrangement is meant to encourage compliance by importers of ware goods. Over and above that, imports by informal traders are subject to presumptive tax to ensure that these traders contribute to the fiscus.
  •  At the time of importation risk management is applied in the selection of consignments for physical examination or in-depth document checks. Post clearance verifications and post clearance audits are also carried out to ascertain the correctness of the declarations and the duties paid.
  •  Segmenting taxpayers through establishment of the Medium and Small Clients Offices in Harare. All large taxpayers are now managed from one point in Harare at the Large Client Office. This approach allows the rest of the Zimra offices to channel resources towards monitoring of the informal sector tax compliance. Accordingly Zimra will be periodically providing reports on the work done in this sector.

TM: What recommendations can you make to improve collections across sectors going forward?

RM: Zimra will continue working with the stakeholders to understand their businesses and unlock revenue. In addition, the use of data analytic tools is a key focus in the analysis of sectoral data and this will be supported by integration of systems.

The public is encouraged to report malpractices which are rampant in the economy which include:

  • Businesses that receipt forex transactions manually in the currency of trade and the records kept separately from those of RTGS sales.
  • Businesses that have back-offices with stand-alone computers specifically allocated for recording of forex transactions.
  • Businesses that have sale points specifically designated for forex transactions, while some have foreign currency kiosks.
  • Businesses that sell direct in foreign currency without receipting.

Members of the public should call for receipts showing correct details of the transactions made with the traders. Where buyers pay for transactions in USD and are given ZWL invoices, there is a need to demand a correct receipt, failure to which the buyers can report the trader to Zimra. The public is therefore encouraged to report, such misconduct by businesses, at their nearest Zimra offices through emails and telephone numbers as follows:

  •  General Lines: 0242-758891-5.
  • Econet toll free: 0808190.
  •  Telecel toll free: 0732880880.
  • Netone toll free: 0814880.
  •  WhatsApp: 0712790972 / 0772135690.
  •   SMS: 0712790972:

Businesses that are registered for Value Added Tax are expected to fiscalise and interface their devices with the Zimra Server. They are expected to issue receipts and invoices in the currency of transaction and to have their fiscal devices connected to the Zimra Server and have data transmitted to that server in the transactional currency. The fiscalisation enables Zimra to closely monitor activities by businesses and ensure they properly report their business transactions and also assists in risk profiling for audit purposes.

TM:The Zimra Asycuda system is not always up and causing some delays at borders, what alternatives are there and what can be done to improve efficiencies and reduce queues which sometimes see truckers spending days at ports?

RM: The Asycuda system is always up and running. There have been no unplanned Asycuda system downtimes this year. There are no delays that can be attributed to Asycuda being down.

TM:What major projects have been introduced over the past few years that are yet to be completed and what are the expected results? When do we expect the projects to be completed?

RM: The Authority has invested much in the Digitalisation Strategy with the support of the board and Ministry of Finance. The major digitalisation projects that were introduced, over and above Systems Integration projects to enhance external data exchange to support the Pillar of “Ease of Doing Business and Facilitation of Trade”, Systems Automation and Data Centre infrastructure enhancement projects are;

  •  Automation of Customs Clearance Certificate (CCC)
  •  Automation of road manifest
  •  New Tax and Revenue Management System, which has been termed “TaRMS”.
  •  Single window project
  •  Drones

CCC

The project started in June 2020 as a result of rampant smuggling of motor vehicles through manipulation of the Motor Vehicle clearing process. The system was completed in full and rolled out in December 2020. The system is more efficient and reduces human intervention thereby reducing revenue leakages or improper clearance.

After the implementation, we have seen a huge positive impact as a result of this system.

Automation of road manifest

The Automation of Road Manifest project started in January 2019 and was completed in July 2020. The project was implemented to enable real time acquittal of permits and licences for controlled goods. This enables economic growth and facilitation of trade and travel by automation of marking off permits and licenses in management and monitoring of importation/exportation of controlled projects. The implementation of this project has resulted in an improvement of turnaround times and an increase in the number of transactions done per period.

Single window project

The single window project will be implemented in a phased approach with the initial phase expected to go live in 2022 and full implementation expected to be achieved in 2023. Single Window Concept at all ports of entry in Zimbabwe, this is in line with the ease of doing business initiative. Single Window is a trade facilitation idea which enables traders to submit regulatory documents at a single location, a single processing of data and information as well as a single payment plan to allow release of goods at the port of entry. Successful implementation of the project will drive the mission and mandate on facilitation of travel and ease of doing business and as well as promoting the overall economic development of the country.

Drones

In a bid to curb smuggling activities along the borderline and to implement effective customs controls to reduce revenue leakages, Zimra is in the process of acquiring modern technology tools such as Drones or unmanned aerial vehicles (UAVs) . The UAVs will assist in gathering relevant information and intelligence through surveillance and monitoring of the undesignated crossing points close to the border post environs and along the porous borderline. Zimra is at an advanced stage in the procurement process of a service provider and the new technology is expected to be implemented before the end of this year.

TM: For a long time, different accusations of corruption have been levelled against Zimra officials and as an institution. In your view, is this more perception than reality?

RM: Based on evidence it is correct that some officers have been found on the wrong side of the law. This is a reality in Zimra and the Authority is seized with the matter.  The Authority has zero tolerance towards corruption and as such all employees found wanting face our internal disciplinary processes as well as being subjected to the judicial system.

A number of strategies are in place to try and stop corruption which includes asset declarations, lifestyle audits, computerisation of processes, use of scanners and training. The Authority has   also engaged stakeholders to encourage them to also desist from corrupt tendencies.

TM: What initiatives are in place to improve tax compliance in general across the board?

RM: 1. Zimra is in the process of acquiring a new Tax and Revenue Management System which as stated before will provide seamless services from registration, filling, account management, queries management etc.

  1. Taxpayer education programs are ongoing with the aim of disseminating tax information to all taxpayers and prospective taxpayers to enable them to comply with all laws.
  2. We also provide information through the print media, TV, radio, website and social media platforms.
  3. In light of Covid-19 our presence on digital media has been very helpful. The platforms provide access to information to many people in real time.
  4. Stakeholder engagement is one of the critical tools that Zimra is using. Online meetings with stakeholders to understand their challenges and address them have been constantly held.
  5. Fiscalisation and interfacing of all devices is a programme aimed at influencing compliance and availability of data.
  6. Segmentation of taxpayers into Large, Medium and Small provides appropriate service to appropriate clients.
  7. Offices have been opened throughout the country and in some instances on a satellite basis as a way of cutting on compliance cost to taxpayers.

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