Zimra must be flexible

While there is such an acknowledgement, Zimra needs to proceed with caution so that it does not kill the goose that lays the golden egg.

There is no disputing the fact that the tax authority has upped the game in the past seven or so months and is viciously raiding defaulting companies so as to maximise collected revenue. It is clearly under pressure to bring money home. This is all within its mandate, but methods sometimes make the difference.

The main complaint that has come from defaulting or owing companies and institutions is Zimra’s heavy-handed approach. Where companies are defaulting, Zimra has tended to adopt a pay-now ask-later approach.

This is problematic. First, in most of the cases, the amounts owed are so huge, running into millions. It is difficult for a company to raise all this money at once without compromising its sustainability. Thus, a company garnished so much can easily fold, throwing its employees into the streets.

That is not good for Zimra and government because it implies an inevitable loss of money from taxes from both the defunct companies and the employees. If a sizeable number of companies fold, the loss to Zimra and the government becomes bigger. This is not helped by the fact that troubled companies are closing on a frequent basis, without having to worry about Zimra in the first place. So, the harsher Zimra becomes, the greater the chance that it might one day end up with no company from which to collect taxes.

There is no way in which defaulting companies must be condoned, because they are breaking the law. In other parts of the world, tax evasion is a very serious crime. However, there is need for Zimra and government to place things in context. A good amount of these companies might be defaulting because they are struggling to keep afloat. It is therefore important for Zimra to be flexible and treat each case as it comes, rather than adopting a one-size-fits-all approach. Where there are defaults, there is need for Zimra to agree on a win-win arrangement that would allow the companies to keep operating while servicing their debts.