adminTHE inability to file tax returns on time can be devastating to a business.
Laws and regulations stipulate that Pay As You Earn has to be remitted by the 10th of every month, while value added tax is expected by the 25th (and this depends on the category that you are in) of every month.
Most often, the cut-off for quarterly payments usually falls on the 25th of March, June, September and December.
Section 39(1) of the Income Tax Act makes it imperative for every registered employer to submit returns of all persons employed by him detailing the salaries, wages, allowances, benefits and pension deductions for each person so employed in the form of an ITF 16.
The due date for submission of ITF16 is within 30 days after the end of the year of assessment and can be submitted electronically.
ITF 16 returns are, however, different from P2 returns that are submitted monthly with PAYE payments.
The ITF 12 and 12C, which is a Self Assessment Return, is expected by the tax authorities before March 31 annually.
There are serious penalties and interests for late submission and payment of these returns.
It is in the best interest for companies to comply with these regulations and ensure that they are constantly engaged with the Zimbabwe Revenue Authority as not doing so can create huge problems.
Many local companies are presently facing cashflow challenges and thus have been failing to pay Zimra obligations on time.
Companies that mainly sell goods and services on credit have been the most affected.
Sometimes customers do not settle their debts timeously and this creates an anomaly in the administration and acquittal of the money that is due to the taxman.
For example, a company might supply goods at the beginning of the month, but payment might be made in the following month.
In such circumstances it might not be possible to pay the VAT owed to Zimra by the 25th of that month.
It is therefore advisable to communicate with Zimra seeking an extension in order to avoid penalties and interest.
In the worst case scenario, a client might go for well over 120 days without any payment received.
There are also similar difficulties in remitting PAYE as many workers are not receiving their salaries on time.
This is typical of Zimbabwe today.
Press reports suggest that local mining companies owe well over US$200 million worth of taxes to Zimra. It mirrors what is happening in other sectors as well.
One can only imagine how the Zimra debtor’s book looks!
There is desperate need for a detailed analysis into current market trends in order to inform measures and policies that can be adopted to create a win-win situation for both Zimra and its clients.
Zimra need not necessarily be rigid because some of the conditions that are considered tough by business might actually have an adverse effect on operations.
Some of the tough conditions could actually shrink the tax base as companies may close due to huge liabilities.
While Zimra critically need the money, local companies are presently fighting for survival.
Clearly, there is need for serious engagement with all relevant stakeholders in order to find an amicable solution.
There might be challenges, yes, but companies should not evade taxes as doing so only affects national development.
For its part, Zimra should commit to nurture businesses and not bludgeon them out of existence.
Most of the debts were accrued post dollarisation, especially in the period between 2008 and 2014.
Thankfully, Government has extended a tax amnesty for companies that could have skipped their obligations.
The period when taxes are due is usually the most confusing and frustrating period for any business.
There are so many taxes and regulations it is hard to keep track of them without help.
Evading taxes is a serious crime that can lead to jail time. Money provided by the taxation has been used by states and their functional equivalents throughout history to carry out many functions.
Some of these include expenditures on war, the enforcement of law and public order, protection of property, economic infrastructure (roads, legal tender, enforcement of contracts, etc), public works, social engineering, subsidies, and the operation of government itself.
A portion of taxes also goes to pay off the state’s debt and the interest this debt accumulates.
Governments also use taxes to fund welfare and public services. These services can include education systems, health care systems for the elderly, unemployment benefits, and public transportation.
Energy, water and waste management systems are also common public utilities.
Colonial and modernising states have also used cash taxes to draw or force reluctant subsistence producers into cash economies.
Sadly, currently 80 percent of taxes collected are for salaries to civil servants.
Play your part as a Zimbabwean citizen and pay your taxes regardless of challenges you are facing.
Just be honest and operate your business with the highest of integrity and ethics.
Taurai Changwa is an articled accountant and ACCA finalist. He is managing director of SAFIC Consultancy. He writes in his personal capacity and can be contacted at [email protected] or visit Facebook page SAFIC Consultancy, or use WhatsApp number 0772374784
Online Reporter