4 Megawatt Complex, Bulawayo Rd, Gweru.

THE TAX CLEARANCE DILEMMA

Every New Year comes with joy and jubilation for the ordinary folks. It presents the opportunity to propound new resolutions, new beginning and new prospects of business prosperity in the future.

The story was not rosy for the Zimbabwean taxpayer this year. First and foremost, the tax changes contained in Finance Act Number 7 of 2021 are unsettling to say the least. Most notable was the radical increase in the rate of withholding tax on contract. Registered operators are now required to withhold a whooping thirty percent up from ten percent with effect from 1 January 2022 from taxpayers who are not in possession of a valid tax clearance certificate.

As if that was not enough, the contract amount threshold over which withholding tax applies was increased slightly from ZW$80,000 to ZW$130,000. Since the rate of withholding tax was increased threefold it would have been fair to increase the current threshold from the current US$1,000 to US$3,000 per year. However, the current annual threshold remains a pittance. Be that as it may, the urgent need for a valid tax clearance can only be ignored by business entrepreneurs at their own peril.

Now, here comes the dilemma. Tax clearance certificates are obtainable from the Zimbabwe Revenue Authority’s (ZIMRA) e-services platform which is currently functioning at its lowest ebb and sometimes not accessible at all. There is presently no other way to obtain the tax clearance certificate without having to logon to the e-service platform. While taxpayers hoped that auto-generated tax clearances that are sent overnight to the taxpayers registered emails were a godsend, the functionality turned out to be downright unreliable.

Tax returns are still supposed to be submitted through the said platform in order to fulfill the tax clearance requirements. In recognition of the instability of their e-services platform ZIMRA proposed alternative ways of submitting returns through email. This method, though easy and reasonable is fraught with inordinate delays and cumbersome follow-ups.

There is no acknowledgement from ZIMRA that indeed the submitted returns have been received. Yours truly reasonably assumed that all tax returns that were submitted and committed on the e-services platform were guaranteed to have been captured and also committed in their SAP system. I had a rude awakening to realize that this was not the case. Even worse is the fact that the committed returns on the e-services platform can not be downloaded anymore. Clearly, the e-service platform would have been a viable method if it was working.

It is obvious that the ZIMRA platform is failing to cope with the spike in traffic bombarding its servers. It is also obvious from the perspective of a software developer, that the platform has inherent design flaws which makes it difficult to scale. Yours truly believe that in this era of cloud computing there is really is no need to worry about acquiring additional servers to scale your application. Additional computing resources can seamlessly be availed on demand through cloud computing technologies.

Given that the platform’s poor performance is no fault of the taxpayers, yours truly would be forgiven to assume that the authority must address the issues with the platform pronto or at the very least extend a reprieve by exempting the need to have a tax clearance for the time being. The authority has done this before but seems not to flinch about the taxpayer’s predicament this time around.

Richard Dimingo
Richard Dimingo
PRACTICE MANAGER NEXT INVESTMENTS

Richard Dimingo is the Practice Manager at Next Investments and has more than twenty five years experience in accounting, tax and management consulting. He is a multi-disciplined practitioner with extensive experience as software developer, NLP practitioner and life coach.  He is the developer of  .NEXT a technology for achieving breakthrough transformation in business, health and personal relationships.

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Richard Dimingo
Richard Dimingo
PRACTICE MANAGER NEXT INVESTMENTS

Richard Dimingo is the Practice Manager at Next Investments and has more than twenty five years experience in accounting, tax and management consulting. He is a multi-disciplined practitioner with extensive experience as software developer, NLP practitioner and life coach.  He is the developer of  .NEXT a technology for achieving breakthrough transformation in business, health and personal relationships.

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