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THE Zimbabwe National Roads Administration (Zinara) says more than 40 percent of the $206 million loan acquired from the Development Bank of Southern Africa (DBSA) for the rehabilitation and dualisation of the Plumtree-Mutare highway was taken up by Zimbabwe Revenue Authority (Zimra).
Giving oral evidence to the Parliamentary Portfolio Committee on Transport and Infrastructure Development, Zinara chief executive Moses Juma said Zimra demanded a total of $85.3 million from Infralink for Value-Added Tax and non-resident tax, which forced the contractor, Group Five International, to borrow more funds to complete the project.
The project began in 2012 and was completed early this year.
“From our records, Zimra charged us $31.9 million on VAT and $7 million for non-resident tax, which comes to $38.9 million constituting about 18.8 percent of the project. And just two weeks ago, my office received another notice from Zimra highlighting that the project has another tax exposure of $46.4 million.
“So if I add the $38.9 we’ve already paid and the outstanding exposure, it means Zimra is demanding from Infralink 41.2 percent of the loan amount to go towards tax,” he said.
Juma said this has also affected the roads authority’s other obligations. He added that the roads authority started making quarterly repayments of $9 million in June last year to service the loan for the project.
Addressing the same committee, Zinara board chairman Albert Mugabe said the government was supposed to forgo tax on the project as it is of national importance.
“Some of them (issues that have been raised) arise because of the technicality on our part as the government of Zimbabwe because we’ve failed to look at an issue and recognise the public good,” he said.
“Yes, I concede there may have been technicalities in the deal structuring or formalities that may not have been followed for the project to arrive at a point where Zimra wouldn’t find fault with us. But this is a national project and I think as the government, and we’re also partly to blame as Zinara as the co-originators of the transaction, having recognised that what we were doing was repaying a loan, whatever technicalities may have been forsaken or overridden.
“We should’ve recognised that if this money is being used to repay a loan, it should never be taxed.”
Mugabe said Zinara cannot be effective in road maintenance, rehabilitation and construction if such things that impact negatively on its operations continue happening.
On disbursements to local authorities, Mugabe said Zinara has disbursed more than $112 million since 2010.
He said $27 million had been collected from licence fees in 2014 while this year, the roads authority has managed to collect $27 million out of a budgeted $55 million.
“Of the $27 million we collected in 2014, $11 million was disbursed to councils with the lion’s share of the balance going towards servicing the obligation for the graders,” he said. — BH24.
Online Reporter