Zimbabwe’s taxing system fighting capital- industrialists


By Kenneth Matimaire

MUTARE – The industry and commerce sector has expressed strong reservations against the conduct of the Zimbabwe Revenue Authority (Zimra), accusing the tax collector of squeezing companies out of business, Radio VOP can report.

Manufacturing companies and government entities said its time the government tax collector reforms under the new dispensation.

The call came at a time President Emmerson Mnangagwa promised to attract foreign direct investment (FDI) in a bid to resuscitate industry and employment creation.

However, industrialists warned that the process also require reforms of the taxing system as the tax collector is said to be “fighting capital.”

“In UK (United Kingdom) their tax collector which is HMRC (Her Majesty Revenue and Customs) does not fight capital. They call capital to a cup of tea and tell them we will keep probing your offices as long as you have businesses. But Zimra fights capital everyday in Zimbabwe. Business is being fought by Zimra everyday being hit with 100 percent tax penalties. There is nowhere in the world where a tax authority hits a tax payer with a 100 percent penalty. This is a culture we have to change,” said Tanganda Tea Company finance director Henry Nemaire.

Nemaire – former vice president of the Confederation of Zimbabwe Industry (CZI) – advised that taxing reforms were paramount for industrialisation to take off.

Leading beverages manufacturer in the eastern region, Mutare Bottling Company (MBC) also raised similar concerns.

MBC managing director Allen Lang said “Zimra needs to change the way it handles tax issues.”

The bottling company was, this year, embroiled in a tax wrangle with Zimra.

“We have been going to Zimra and every time they have been raising new issues. They are saying they have issues that are coming from 2013 and 2014 where certain credits you (MBC) paid were disallowed but that was not communicated to us. Because in those years we actually received our tax clearance certificate including this past year. But now they say we need to pay a balance of $256,000 and they say it’s for late payment balances,” said MBC finance manager David Kanengoni.

A company cannot receive payments from clients without the tax clearance.

Any company that trades without a tax clearance certificate will be subjected to a 10 percent withholding tax, an option Lang said MBC “can’t afford in such trying times.”

Local authorities have not been spared from the melee as they appealed to government to order Zimra to stop garnishing its accounts.

Zimra has been grappling with a shrinking revenue base following the collapse of the country’s industrial sector, forcing the tax collector to tighten its screws and further squeeze the few remaining companies and tax payers.

In his budget speech Finance and economic Development minister Professor Mthuli Ncube introduced a raft of measures to raise revenue which includes charging duty on motor vehicles in foreign currency.