No valid tax clearance certificate, no licence renewal: Stop issuing licences, Zimra orders councils

Source: No valid tax clearance certificate, no licence renewal: Stop issuing licences, Zimra orders councils – Sunday News Jan 1, 2017

Amanda Ncube, Sunday News Reporter
THE Zimbabwe Revenue Authority (Zimra) has ordered all local authorities to stop issuing or renewing trade and business licences to people who do not have valid tax clearance certificates.

The order has, however, proved unpopular among local authorities who have traditionally been issuing licences without clearance from Zimra and has set the revenue authority on collision course with the councils that feel this was likely to drastically affect their revenue inflows and choke their collections.

According to a letter issued by Zimra and signed by the regional manager for Domestic Taxes Region 2 Mrs Roseline Ntuli, local authorities are no longer allowed to renew or issue licences to businesspeople in their areas unless the operator, miner or any other business person produces to the licencing authority a valid tax clearance.

A tax clearance certificate is confirmation from revenue authorities that an applicant’s tax affairs are in order at the date of issue of the certificate. In some instances a certificate may be issued to a customer who has tax arrears provided such arrears are covered by an instalment arrangement that has been agreed on with revenue authorities.

“You are kindly reminded that terms of Section 80A of Income Tax Act (Chapter23:06) you are required not to issue or renew trade/business for persons without valid tax clearance certificates,” reads part of the letter in possession of Sunday News.

Local authorities are against the initiative and they say it is going to negatively affect them as well as their service delivery.

Umzingwane Rural District Council (RDC) chief executive officer Mr Ndumiso Mpofu said they have been issuing and renewing licences for business people in their district without any clearance from Zimra.

“We are surprised why all of a sudden Zimra decides to change things. It is an inconvenience to everyone involved considering the fact that the businesspeople are not aware of this development and it will take time for them to be in contact with Zimra,” he said.

Mr Mpofu said the initiative was going to interrupt service delivery since that was the money that was supposed to be used to kick start projects especially in January.

“Zimra should decentralise and establish their offices in districts so that businesspeople can access their licenses whenever they want. What they don’t realise is that they are enhancing illegal trading among businesspeople,” he said.

Mr Mpofu said while they appreciate the work of Zimra, it should not restrict or obstruct the ease of doing business but should instead facilitate business.

Insiza Rural District Council (RDC) chief executive officer Mr Fidres Manombe said they also received the letter from Zimra and they were against it as it was going to negatively affect them.

“We are already experiencing low revenues after the Government in 2015 took over the collection of unit tax from local authorities and now Zimra is adding to the problem. As of now we are failing to pay salaries and we thought that we will get money from the licences,” he said.

Mr Manombe said: “With January fast approaching we were hoping that we will get some revenue there, as for the people who have businesses in rural areas I think it is kind of impossible for them to obtain a clearance form which is further leading to illegal dealings among businesspeople.”

Sunday News also managed to talk to the Mangwe Rural District council chairman Mr Mafesi Ncube who could neither confirm nor deny receiving the letter.

“If indeed Zimra is going to implement that it means the Government is trying to close all local authorities because there is no other way of getting income. As councils we are supposed to get five percent from the Government but we are getting nothing at the moment,” he said.

Added Mr Ncube, “Unit tax was taken away from us and now Zimra is doing the same which means that the local authorities are going to close.”

Efforts to get further clarity on the issue from Zimra were fruitless.