Account for all your money, threatens tax collector
April 11, 2017
Zimbabwe, Harare: Zimbabwe has 350 registered privately owned aircraft, some valued above $5 million. Now the Zimbabwe Revenue Authority (Zimra) will conduct a lifestyle audit on big spenders to implement a new tax compliance enforcement strategy in the country's troubling economy.
Initially used in the 1930s to investigate and imprison American gangster, Al Capone, it has been adopted by some nations to determine personal expenditure against revenue – any variance resulting in additional tax.
Tax evasion is depriving Zimra of revenue as more companies close. Previously, some officials have been mentioned for financial externalisation, but prosecution has dragged on.
“The Zimbabwe Revenue Authority (Zimra) has embarked on lifestyle audits as one of its initiatives to improve tax compliance levels and to assist taxpayers with information on tax matters,” announced the tax collector this week.
The audits are carried out to verify compliance of individual taxpayers in terms of the statutes administered by ZIMRA, which include Income Tax Act, Capital Gains Act; Value Added Tax Act and Customs and Excise Act.
Tax authorities are adamant this is not a witchhunt - nor is the focus political or personal.
According to the legislation for the audit its aim is to "educate clients on how to correctly declare their income and make self-assessment of their tax status in terms of the law". Zimra suggests people should cooperate to so they are issued with a "tax clearance certificate can enhance clients’ business opportunities and prospects".
Zimbabwe is an example of the super rich and super poor. who live side by side.
Trendy and sexy sports cars, gold plated Italian sneakers and first class travel has become the lifestyle of the new elite in a country teetering on the brink of economic and political collapse. Often seen crusing down the streets of Harare, showing the visible contrast between the rich and poor.
But now the government wants its citizens to account for their homes in luxury golf estates, huge mansions and elaborate lifestyles.
The big boys
Zimbabwe’s clique of the rich and famous immediately comes under the radar. And they are not shy to boast their assets, and their triumphs from designers Gucci to fast pace vehicles many dream of. In the capital Harare it could resemble the high streets of London or the desert city of Dubai with the flash and glitter.
Mining mogul, John Bredenkamp owns two private jets, including a Citation, similarly to ones flying Hollywood entertainers. The jet can take him anywhere, anytime.
Zimbabwe’s notorious BIG imitator, Wicknel Chivayo boasts of spending sprees abroad.
“I drive the latest cars so I fit comfortably, the seats are easily adjustable. I shop only in America where I can tell the shop assistant this T-shirt is way too big. They stock 10 sizes above me,” brags Chivayo on Facebook.
Though his source of wealth remains mainly unknown, the former bus loader owns vast properties. He once splashed $43 000 (R559 000) on a Mercedes Benz for a football player.
Philip Chiyangwa is a flamboyant property developer, who regularly posts selfies showcasing his wealth. A fleet of Mercedes, Chrysler Cross Fire and Rolls Royce are among his car pool. In addition he controls 39 listed companies.
“I have the money and I don’t have a problem with money,” the tycoon residing at his ‘White House’ residence in Harare’s affluent suburb, once mentioned.
Even parliamentarians are not spared by the recent law.
“Everyone must submit their assets and businesses so that there is no conflict of interest. This is informed by the Constitutional provision on Section 198. We have finished drafting the asset declaration register and it was adopted. We are now taking it to the next level, which is implementation,” announced Nelson Chamisa, Chairperson of the Legal and Procedural Affairs Committee.
Legislators must declare assets, including land, buildings, movable and other assets worth more than $25 000.
The surveillance covers bank records, deeds and other title registers that help determine whether targets are paying taxes. Zimra first introduced the lifestyle audit in 2016, largely focusing on individuals who have publicly declared their properties and wealth. But now the net is cast wider.
Zimra has for some time been failing to meet its revenue targets largely due to tax evasion.
With its massive compliance drive, in the first quarter of 2017, Zimra surpassed a revenue target of US$826, 63 million by six percent to reach US$862,47 million, with “operational efficiency and effectiveness, cargo tracking and an enhanced border control system” accounting for this huge leap.