Public executives in tax evasion scam

via Public executives in tax evasion scam | SW Radio Africa  by Mthulisi Mathuthu on Friday, March 21, 2014

Between 2009 and 2013 Zimbabwe’s parastatals and local authorities may have paid as much as $85 million in untaxed ‘corrupt salaries’ to top executives, tax experts have calculated.

The Financial Gazette has reported that 181 executives of parastatals and local authorities were diverting $21 million in annual incomes to untaxed benefits, to dodge the taxman. The report said with the anomaly backdating to 2009, which is when the US dollar was adopted, this translates to more than $85 million.

Tax expert Zack Murerwa told the newspaper that these are the amounts that could have been paid without being taxed. Murerwa said according to the Income Tax Act any benefit that is paid to a manager is taxable but ‘most companies were not taxing staff correctly.’ As a result tax evasion may have occurred and some benefits may have been paid through ‘secret payrolls’.

According to the report, Murerwa said he believes that an audit of the concerned entities would reveal that there was ‘prejudice to the state’. He added: ‘There are questionable tax commitments from the listed firms, especially on benefits.’ Finance Minister Patrick Chinamasa, who also chairs the newly formed cabinet committee on state enterprises, has said an audit is already underway.

Salary schedules released by Chinamasa this week showed that local authorities’ bosses were earning a combined $520 million a month in untaxed benefits and a further $312 million in untaxed allowances. The bosses of parastatals were earning a combined one million dollars in monthly benefits.

The MDC-T MP for Mufakose and chairperson of the parliamentary committee on public accounts, Pawurina Mpariwa, said her committee will be meeting with Chinamasa’s committee ‘soon’. Mpariwa said they will seek to input into the work of the committee by making recommendations.

She said they will be formulating their recommendations next week after meeting with the officials from the National Social Security Authority (NSSA).

The public accounts committee summoned NSSA executives last month after reports that the authority was embroiled in a $50 million hotel scam. Reports said the cost of a hotel built by NSSA in the border town of Beitbridge had grown from $17 million to $50 million, in suspicious circumstances. According to Mpariwa NSSA officials will again appear before Parliament next week.

The issue of ‘corrupt salaries’ paid to CEOs has dominated public debate for much of this year and has caused indignation across the country. The situation is made worse by the fact that the concerned individuals and institutions are generally incompetent and underperforming.

But while many state CEOs have been exposed in the ongoing revelations on ‘corrupt salaries’ few, if any, believe the ZANU PF government has the capacity and will to effectively deal with graft. So far a veil of secrecy has been maintained on the earnings of cabinet ministers.