Businesses battling to stay afloat, and even the failure of garnishee orders to collect outstanding tax debt, have left the Zimbabwe Revenue Authority (Zimra) with $4.6bn in outstanding taxes.
Faith Mazani, its commissioner-general, told the Sunday Times it hoped plans for debt recovery would pay off. This includes establishing a debt management unit and negotiation of payment plans with taxpayers.
"Debtor collection measures, including the use of garnishee orders, have not been successful. Zimra is currently engaging the finance ministry to write off debts which are not likely to be collected," he said.
There are 319,497 registered taxpayers on the authority's books, but only 40% are tax- compliant.
Last year, businesses asked President Emmerson Mnangagwa to direct Zimra to reduce penalties and write off legacy debt to allow them to start on a clean slate.
"Debt arising from penalties and interest under tax amnesty and voluntary disclosure, carried out last year, was written off," Mazani said. "The finance ministry has now been asked to come up with a plan to write off other debts that are not likely to be collected."
The other debts include unremitted value added tax (VAT) and pay as you earn (PAYE).
However, in a bid to widen its tax base, Zimra registered 19,497 new taxpayers between May last year to date.
Reasons for the increase in debt are twofold: businesses, struggling to remain operational, have defaulted on remitting taxes such as PAYE and VAT to the authority, and Zimra's debt collection measures, particularly the use of garnishee orders to claim outstanding taxes, have been unsuccessful.
Mazani said that last year the taxman collected $5.6bn against a target of $4.3bn and in 2017 collected $3.7bn against a target of $3.4bn. This year, Zimra projects it will collect $6.4bn. Rapid company closures, however, pose a threat to thisnew target...