Zimbabwe: Fiscalisation project stalls
4 May 2014
Ten days from now Tanzania’s taxman, Tanzania Revenue Authority (TRA), expects consumers to demand fiscal receipts for everything they buy “even if it is beer, a soda or a needle”, as the second phase of fiscalisation kicks in. Already, the first phase has been completed. Unfortunately, the project has remained largely abortive in Zimbabwe despite Government making fiscalisation legally enforceable by gazetting Statutory Instrument 104 of 2010 on June 8, 2010. In particular, the legal instrument requires all companies whose annual turnover is more than US$240 000 (Value Added Tax category C), to record their sales using electronic fiscal devices.
Fiscalisation essentially entails introducing electronic fiscal devices (EFDs) — machines designed for use in businesses for efficient management controls in areas of sales analysis and stock control system — such as electronic tax registers (ETRs), electronic fiscal printers (EFPs) and electronic signature devices (ESDs). In essence, these devices are designed to capture all sales information and automatically re-route it to the tax authorities who in turn are able to see how much they are owed by companies.
TRA is generating much of the oomph needed to drive the project to its logical conclusion from the encouraging increase in revenue generation since it began the policy in 2010 — ironically the same time that Zimbabwe began its own fiscalisation project. The Authority observes that tax collection improved by 9,6 percent between 2010 and 2011 and 23 percent for 2011 to 2012. Due to the expanding use of the electronic tax register, TRA now expects to collect US$370 million (600 billion shillings) a month, up from the current US$250 million (400 million shillings).
The Zimbabwean Government believed that local revenue collection would inevitably improve by configuring fiscal devices to enable them to record sales and other tax information on the read-only fiscal memory at the time of sale for use by the tax authorities in Value Added Tax (VAT) administration. However, market watchers say that the Zimbabwe Revenue Authority (Zimra), which is the lead agent in implementing the process, has been lethargic, a development that has stagnated the process.
Last week, a Harare-based tax consultant, who preferred to remain anonymous, said that although the project was launched four years ago, currently there is no system to connect organisations to the proposed Zimra database.
“There is no system to connect organisations to the proposed Zimra database in line with Clause 4(d) of SI 104 / 2010. The project has stagnated and not all registered VAT operators have complied with fiscalisation. This is against the backdrop of massive Government spending estimated at around US$10 million in VAT rebates for companies that complied with the law. Small to Medium Enterprises, which have been cited as not contributing to the fiscus, should naturally be included in the next phase of fiscalisation. However, this is not possible due to the current pedestrian state of the project. Zimra does not appear to be too keen to move to the next phase,” said the expert.
There are suspicions in the market that some Zimra bosses might have been “influenced” to maintain the status quo by a powerful clique of business lobbyists that is benefitting from evasions. This has, however, never been proved. Some sections question why there has been lethargy in implementing the project especially after Zimra’s board chairman Mr Sternford Moyo confirmed that fiscalisation had improved compliance and contributed to the good performance of VAT collections for the year ending December 31, 2012. In fact, he noted that, “to some extent, fiscalisation levelled the playing field for large operators thereby improving compliance”.
Zimra Commissioner-General Mr Gershem Pasi conceded last week that the Authority’s system is yet to be connected to retailers.
He said the project will resume during the third quarter (between July and September) of the year.
“The technology that we had identified was not really appropriate and was costing more to convert it to be compliant with the computerised system, so we are reviewing that and we will be coming up with a more user friendly system soon. We are almost through the scoping. . . When we started the project, the authority had not been enabled to receive data from the machines, we did not have the capacity and that is the capacity which we are now putting in place.
Source: Sunday Mail