10 firms take Zimra to court

via 10 firms take Zimra to court | The Herald 21 July 2014 by Fidelis Munyoro

More than 10 corporates have taken the Zimbabwe Revenue Authority to court over punitive garnishee orders issued on their accounts for outstanding taxes running into millions of dollars, with the Fiscal Court of Appeal sitting today to start hearing the cases. Zimra has come under heavy criticism for garnishing the corporates’ accounts at a time many companies are struggling to make ends meet and stands accused of “killing the goose that lays the golden eggs”.

Beginning this year, Zimra has swooped on several defaulting companies and imposed garnishee orders on their bank accounts and major debtors in a bid to recover tax liabilities running into millions of dollars.

Even some of the companies that made voluntary disclosures of their arrears to the tax collector and made payment plans were not spared the garnishee orders.
Justice Samuel Kudya, who is presiding over the Fiscal Court of Appeal, will today hear appeals brought by Zimbabwe Leaf Tobacco Company, Blanket Mine and Steelmakers that owe Zimra close to US$10 million between them.

Several companies and banking institutions, among them Barclays Bank, Standard Chartered Bank, Zimplats, RMC Hospital, Mayor Logistics and Harare City Council have lodged their appeals with the Fiscal Court of Appeal.

Some of the companies ended up approaching the High and Constitutional Courts after the filing of their appeals at the Fiscal Court of Appeal failed to stop Zimra from garnishing their accounts.

According to the law, the Fiscal Court of Appeal should have decided on the cases within three months, but the prescribed period has since lapsed in many of the cases.
Zimra lawyer Advocate Thembinkosi Magwaliba confirmed that the hearings will begin today, saying the cases of ZLTC, Blanket Mine and Steelmakers which are on the court roll, had nothing to do with garnishee orders, but were appeals against the Zimra tax charges.

“These are appeals by the affected companies in respect of tax charged by Zimra,” said Adv Magwaliba. “The cases are different and arguments raised by Zimra differ with each case. In some cases it is about income tax while in other cases it is about the Capital Gains Tax.”

Leading lawyer Mr Terence Hussein welcomed the commencement of the hearings, but thinks it would be wise for more judges to deal with the appeals which continue to pile up.

“It is good that the court has started hearing cases, but the pace is unacceptable,” he said.
“This court affects the running of the entities that affect the economy and must act expeditiously. If there are insufficient personnel, more personnel must be deployed with utmost urgency. I think an additional judge is required to the Fiscal Court of Appeal.”

Early this year, RMC Hospital owner Dr Munyaradzi Kereke took Zimra to court after it blocked cash-flows due to his hospital by issuing garnishee orders to the hospital’s major trade debtors such as Cimas, Premier Service Medical Aid Society and Stanbic Bank to collect tax liability to the tune of US$3 297 103, 62.

He was ordered to settle his liability, but Zimra later reduced the figure to around US$1,7 million after a second assessment.
Dr Kereke has since appealed to the Supreme Court against the lower court’s decision, arguing that Zimra’s action was grossly unlawful.

Zimra Commissioner-General Mr Gershem Pasi is on record as saying the revenue authority embarked on garnishing defaulting companies and would launch a blitz on State enterprises whose top management were allegedly manipulating records and using political influence to evade paying tax.

In the first quarter of the year, Zimra recorded net collection of US$834,6 million, representing a positive variance of 2 percent against a target of US$17,9 million.
Value Added Tax was the major contributor to the revenue, weighing in with 25 percent of the total.

Individual tax and excise duty were the other revenue heads among the major contributors.
Collection under individual tax amounted to US$193,3 against a target of US$168 million, resulting in a positive variance of 15 percent.

During the same period last year, US$127 million was realised, which translated to 12 percent growth in revenue.
Corporate Income Tax amounted to US$104,7 million against a target of US$88 million, resulting in a positive variance of 19 percent.