Our economy needs robust tax system — Zimra
THE Zimbabwe Revenue Authority (ZIMRA) says it needs a robust and modern tax system to handle taxation in a complex economy such as Zimbabwe’s.
This entails further capacitation with the relevant tools to tax the country’s predominantly cash-driven informal sector.
ZIMRA’s role in the economy includes the collection of both domestic and trade taxes on behalf of various arms of Government.
The revenue authority also provides advisory services to the Government in line with fiscal and economic matters, which is crucial in policy formulation.
Board chairman, Mr Anthony Mandiwanza, told a national revenue mobilisation and strategic tax dialogue with three parliamentary portfolio committees yesterday that revenue collection and administration must consistently be transformed to create a fair and efficient tax system that encourages compliance, supports businesses and promotes economic growth.
“Zimra is requesting support with legislative processes that expand the tax base and support with capacity and tools to manage the informal sector given the cash economy.
“We also need support with appropriate funding for operations and capital projects, as well as expediting automation of the whole Government approach and public awareness of the need to be tax compliant across the economy,” he said.
Mr Mandiwanza said ZIMRA was alive to the need for a paradigm shift, specifically the new industrial revolution, which is artificial intelligence; hence, it is investing in technology to migrate from human-based interventions to the digital platform.
“ZIMRA must continue to invest in that direction in order to remain relevant and ahead of the game, and commitment to tax compliance will foster a culture of responsibility and accountability, reinforcing the social contract message that every citizen has a role to play in nation building,” he said.
Mr Mandiwanza said the engagement with legislators should herald a new dawn and form a relationship to deliberate on legislating compliance, digitalisation and international best practices to enhance revenue mobilisation and ease of doing business.
“Tax revenue is the most sustainable source of income to finance development goals and SDGs (Sustainable Development Goals), thus reducing the need for external assistance. Through our concerted efforts, we will be contributing to a more sustainable and self-funding future for our nation,” he said.
However, Mr Mandiwanza said ZIMRA was saddled with many challenges, which included the informal sector — which is largely a cash economy — porous borders, manual processes, and capital expenditure limitations.
“But the challenges are not insurmountable, and with your support, we will continue to overcome them,” he told the legislators.
Mr Mandiwanza said ZIMRA’s role in the trade facilitation process within the region was critical following the launch of the Africa-Continental Free Trade Area (AFTCA), which is now operational.
“As a landlocked country, our processes shall be up to speed and provide our country a competitive edge. We are ready to improve on turnaround time at all our ports of entry,” he said.
ZIMRA commissioner general Ms Regina Chinamasa said the introduction of electronic systems reduced some complexities from taxpayer registration, return filing, tax payments and payer account management.
She said cumulative revenue for the period January to August 2024 was ZiG38,88 billion against a target of ZiG42,82 billion, while revenue in US dollars terms amounted to US$1,95 billion against a target of US$2,17 billion.
“The target of ZiG90,1 billion can be attained as ZIMRA has been working on enhancing its systems and processes through its digitalisation drive,” said Ms Chinamasa.
She noted that the digitalisation programme was one of the initiatives ZIMRA is doing to harness the databases and onboard all other qualifying taxpayers.
Ms Chinamasa said under the tax revenue management system there were integrations being implemented, including every stakeholder database so that we use those databases as a single source of data.
“It will then help us manage data integrity systems, but again, it helps pool data, and then we are able to consolidate that for the ease of doing business,” she said.
Commissioner of domestic taxes, Mr Misheck Govha, said ZIMRA rolled out the Tax and Revenue Management System (TaRMS) procured by the Government, with assistance from the African Development Bank (AfDB).
“The system is our backbone for registration, payment processing, return processing and general management of revenue administration.
“The system is being integrated with a number of Government agencies and State enterprises for a 360-degree view of revenue mobilisation. The last stage is being rolled out this month of September 2024,” he said.
Mr Govha said the proliferation of small to medium enterprises (SMEs) and growth of the information sector had been of great concern. To address this, ZIMRA has implemented the Block Management System (BMS) to improve compliance.
He said the BMS sought to address all taxpayers’ needs on-site, wherever one is located, in line with the national mantra of leaving no place in terms of compliance behind.
“We, however, note that there is room for a simplified regime for taxation of informal traders whose transactions are mostly cashbased,” he said.
On debt management, he said ZIMRA has noted taxpayers in the public and private sectors have tax debts and paying up has been rather lethargic. Mr Govha said there is room for the implementation of massive debt collection strategies, which need complementary supportive legislation.
“These include temporary closure of businesses and embargoes, seizure of goods for debt recovery, use of tax liens, and prosecution for non-payment of tax as in other jurisdictions,” he said.
Representing the United Nations Development Programme (UNDP), Mr Alex Warren-Rodriguez said Zimbabwe can leverage domestic resource mobilisation for development, stability and achievement of Sustainable Development Goals (SDGs).