Post-vehicle clearance audit unearths US$70m hole

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A special post-vehicle clearance audit last year into vehicle imports, unearthed 485 irregular import documents with a potential revenue inflow prejudice to Treasury valued at US$70 million, the Zimbabwe Revenue Authority (Zimra) revealed.

Most of the vehicles, Zimra said, were luxury cars against which investigations have been instituted along with efforts to recover the outstanding amounts due to the authority.

The audit was done as part of wide-ranging measures implemented by the tax authority to plug all revenue leakages and maximise collections, Zimra Commissioner-General Faith Mazani said at the authority’s annual general meeting (AGM) last week.

As part of the revenue-enhancing measures and collections through post-importation audits, Zimra implored all importers of specified motor vehicles to verify whether their vehicles were properly cleared and if  duty was paid. Last year, Zimra said it was owed  $5 billion in unpaid taxes, including from undeclared or under declared high value luxury vehicle duties.

Comm-Gen Mazani said Zimra’s focus was now on strengthening partnerships with law enforcement agents to combat corruption, border surveillance, curb smuggling and use of modern audit techniques to detect revenue declaration anomalies.

Working with the Zimbabwe Anti-corruption Commission (Zacc), Comm-Gen Mazani said a total of 601 cases were investigated last year with US$163.78 million identified for recovery, which is ongoing. 

She said the revenue authority was aggressively using the Money Laundering and Proceeds of Crime Act to seize and attach all property acquired through fraudulent means, culminating in the an historic asset forfeiture earlier this year.

The ongoing efforts to reduce revenue leakages also saw Zimra increase the number of cargo trucks being sealed, which grew by 27 percent to 39 601 in 2019 with a total of 27 of the country’s major routes from various ports of entry being under electronic cargo tracking (ECTS).

This has resulted in the number of geo-fencing violations coming down by 44 percent while number of geo-fencing violation penalties similarly dropped by 44 percent to 210 000.

As such, Zimra said net revenue collections for 2019 came in at $23.19 billion, way ahead of the annual target of $18.6 billion, which was 24.6 percent above target.

The top six tax revenue heads last year were excise duty (17.76 percent), individuals (14.8 percent),  companies (13.75 percent), Value Added Tax from local sales  (13,18 percent), inter-mediated money transfer tax  (IMTT) (11.4 percent).

Comm-Gen Mazani said the authority’s operations were carried against a range of dynamics, including high inflation, which closed the year at 521 percent, shortage of foreign currency, liberalisation of foreign exchange market, shortage of fuel, illegal use of US dollars, drought and the negative impact of Cyclone Idai.

Focus is now on implementing a new US $10 million tax and revenue management system (TaRMS), which is funded by the African Development Bank. – Herald