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Companies struggle to pay $7 billion tax

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Zimra said parastatals owed government $1,4 billion, while local authorities owed $306 million, with importers owing $521 million during the period.

BY MTHANDAZO NYONI

ZIMBABWE’S private sector owed the Zimbabwe Revenue Authority (Zimra) $6,5 billion in unpaid taxes at the end of last year, according to an annual report released by the tax collector.

Zimra said parastatals owed government $1,4 billion, while local authorities owed $306 million, with importers owing $521 million during the period.

Out of a total debt of $8,7 billion, Zimra recovered $3,2 billion during the review period.

Total revenue in the period under review stood at $182 billion.

In 2019, the private sector owed $3,4 billion before the figure rose to $6,5 billion last year, parastatals owed $1 billion, importers owed $187 million and councils owed $175 million.

Failure to pay taxes by companies has hamstrung the government efforts to fund public sector programmes including the construction of roads and dams.

“Outstanding debt position as at 31 December 2020 closed at $8,669 billion which translates to a debt to revenue ratio of 3% against a target of 5%,  a decrease from 21% in 2019.

“Despite the increase in debt from $4,791 billion as at December 31, 2019, debt to revenue ratio improved due to increased revenue collected during the year,” Zimra acting commissioner-general Rameck Masaire said.

An analysis of the tax heads showed the debt in respect of value added tax (VAT), including penalties and interest, was $2,7 billion, pay as you earn (Paye) $2,6 billion, income tax $1,6 billion, withholding tax $1,3 billion and customs duty $521 million.

The private sector has blamed Zimra taxation measures’ heavy-handedness saying they do not encourage the thriving of formal businesses.

But Zimra is optimistic that its strategies, used in managing the debt, will yield positive results.

These include prosecution of tax and customs duty defaulters.

“Zimra is now carrying out criminal investigations to prosecute taxes and customs defaulters.

“The authority also enforces the Money Laundering and Proceeds of Crime (Amendment) Act, 2019.

“A campaign on the unexplained wealth orders has been launched and will be run in collaboration with the Zimbabwe Anti-Corruption Commission and the National Prosecution Authority,” the annual report said.

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