adminTaurai Changwa
For local businesses, the beginning of the year is often associated with the need of one key document: the tax clearance certificate which is issued by the Zimbabwe Revenue Authority (Zimra).
It is very important because it enables businesses to trade during the year.
However, due to technical hiccups that are currently being experienced by Zimra, it has been a nightmare for most companies to get this crucial certificate.
What is most worrying is that the inconvenience is also affecting compliant companies, especially those whose returns and payments are up to date.
The revenue collection body has now resorted to issuing one-month tax clearance certificates until the system is fixed.
It is simply a miss as it becomes burdensome for businesses.
In any case, anything that is time consuming for businesses costs them dearly.
Not only that – submitting monthly returns online has also become nightmarish as logging into one’s portal has almost become impossible.
It is a pity that firms are now resorting to the “ancient” method of submitting tax returns manually as before.
Quite clearly, this militates against progress and it needs to be fixed promptly.
Granted, technical and technological systems are susceptible to glitches and hitches, but authorities also need to be considerate to clients in such circumstances, which is not happening at the moment.
In fact, Zimra continues to punish companies that are submitting their tax returns late, irrespective of the circumstances that might be affecting the businesses.
As has often been argued by business representative bodies, Zimra has to deal with companies on a case-by-case basis.
Anything that is contrary to this is very counterproductive.
For example, some firms might have valid reasons for failing to submit their tax returns manually.
This is why the know-your-customer (KYC) principle becomes very important; in some jurisdictions, it is a key ingredient in cultivating the much-needed rapport between businesses and the authorities.
While paying taxes is quite sacred, a heavy-handed approach, especially in cases that do not warrant this, is very unfortunate. So, Zimra, under the current reforms being pursued by the new political administration, has to seriously introspect.
What’s worse for Zimra is that they sometimes have a penchant to impose inexplicable penalties and interest charges, even when the client has been paying his dues on time.
Such grey areas need to be reviewed, because when businesses suspect that they are either being treated unfairly, the relationship between the two constituencies – Government and business – becomes defined by mutual suspicion rather than trust.
In unfortunate instances where businesses become aware of such penalties, usually when they are applying for tax clearance certificates, it often means another long, laborious process to fix the problem.
Often the affected party is required to write a letter of appeal, and by the time the matter is resolved, one might have lost valuable business.
Further, in some unfortunate cases, some companies have actually paid a price for sins they did not commit in order to just get on with business.
Usually, when a business doesn’t have a tax clearance certificate, the company it is trading with is required to withhold 10 percent of the invoice.
For companies that might be compliant, this is quite unfortunate as it amounts to an extra cost for the business. Where disputes emerge, resolving them timeously – say in 24 hours -might be worth considering.
As the cliché goes, time is money. The time for Zimra to resolve how it interfaces with clients is now. As we move forward in 2018, it is absolutely necessary to improve the doing the business environment in order to turnaround the economy.
The other challenge we face as a country is that we rely on foreign consultants to resolve most of our Information Technology challenges.
Outsourcing such expertise, particularly in cases where it exists locally, results in outflows of foreign currencies.
The local procurement policy that is being mooted by Government should really consider this: where the competence and expertise exist locally, prioritising should therefore be given to the local companies.
Last year, a local bank had to fly in experts to deal with its IT system challenges, which is rather unfortunate.
Is Zimbabwe not producing enough IT experts to solve such challenges?
Foreign consultants will certainly require large sums of money to fix the problems.
Human capital surely needs to be nurtured in this industry.
We now live in what is called the “technological society”. Technology can at times fail us and it is very important to be always alert when such circumstances arise.
Planning for such scenarios on time is of importance.
As was said at the recent interface between President Mnangagwa and vice chancellors of local universities, it is high time our intellectual capital sweats for the local economy.
Taurai Changwa is a member of the Institute of Chartered Accountants of Zimbabwe, Certified Tax Accountant and an Estate Administrator. He has vast experience on tax, accounting, audit and corporate governance issues. He is a director of Umar & Tach Advisory. He writes in his personal capacity and can be contacted at [email protected] or on WhatsApp on 0772374784.
Online Reporter