eBusiness Weekly
Tawanda Musarurwa
Business has implored fiscal authorities to put in place an effective tax dispute resolution mechanism to reduce costly litigation pitting the Zimbabwe Revenue Authority (Zimra) and local companies.
Over the years, the taxman has brought a number of companies before the courts challenging them with regard to the taxes they are paying and their tax filing positions.
In one of the more famous cases, in 2018 the High Court found Zimra to be on the wrong side of law, ordering it to pay back $9,5 million it unlawfully garnished from Zimbabwe Platinum Holdings (Zimplats).
Zimra, in violation of the law, imposed fines to the tune of $9 554 215 on Zimbabwe Platinum Mines (Pvt) Ltd for alleged Customs and Excise Act infractions.
Most of the tax disputes emerge out of varying interpretations of standard commercial agreements in industry, but some of the garnishees have threatened viability of many companies.
In an ongoing case, the high Court is yet to make a ruling over an outstanding US$14 million tax dispute involving Bindura Nickel Corporation (BNC) and Zimra.
The BNC-Zimra tax dispute emanates from tax assessments issued in February 2018 largely in relation to legacy issues arising out of how the nickel producer was structured some years ago.
Institute of Chartered Accountants of Zimbabwe (ICAZ) chief executive officer Gloria Zvaravanhu said; “We need to have an effective dispute resolution process between taxpayers and Zimra. So the current dispute resolution process is burdensome on the taxpayer and often results in significant costs in time delays as a result of pursuing litigation from both the taxpayer’s perspective and from Zimra’s perspective as well.
“One of our suggestions was that we needed a dispute resolution committee to be set up with representation of suitably qualified and experienced key stakeholders to consider significant matters being contested between taxpayers and Zimra, because it’s all trying to make the business environment facilitative and attractive for business as opposed to it being a challenge.
“This committee will be a step between the current resolution process and litigation.”
Currently, an aggrieved taxpayer can lodge an objection with Zimra within 30 days after receipt of the notice of assessment or of the written notification of the decision or determination. Zimra will then make a determination after assessing the objection.
Alternatively, companies or individuals can take the legal route if not satisfied by this process.
The taxman carries out its mandate under the guidance of several laws, including the Income Tax, Capital Gains and Value Added Tax (VAT) Acts.
According to Zimra, “the Income Tax, Capital Gains and VAT Acts provide for appeals that should be made through the Courts of law. Such appeals are handled through the Special Court for Income Tax Appeals, and Fiscal Appeals Court. In addition, the client may seek redress though the High Court and Supreme Court.
“The client may choose not to lodge an objection but may submit an appeal in order for a tax -related dispute to be resolved. The appeal may be lodged against the officer, manager, regional manager or case manager’s decisions.”
The above is done in terms of the following sections of the afore-mentions Acts: Section 65 of the Income Tax Act, appeal at Special Court or High Court; Section 33 of the Value Added Tax Act appeal at Fiscal Appeals Court, and Section 25 of the Capital Gains Act appeal at Special Court or High Court.
But the litigation process has proved to be protracted, with some cases taking up to three years to be resolved.
Meanwhile inflation will be taking toll on the money assuming the companies finally win their cases against the taxman.
An effective tax dispute resolution mechanism will only benefit companies and individuals, but the tax collector itself with revenue collection ticking upwards.
Treasury estimates project that cumulative revenue collections for 2020 will close at $173,5 million (16,3 percent) of Zimbabwe’s gross domestic product).
For 2021, revenue collections are projected at $390,8 billion (around US$4,8 billion).
