Mutare City Council in tax evasion scam

via Mutare City Council implicated in tax evasion scam | The Source. 20 June 2014

MUTARE, June 19 (The Source) – Mutare City Council is spending about $2,4 million in allowances designed to hide earnings from the taxman since 2012, an audit has shown.

The audit was conducted by the Urban Development Corporation (UDCorp) and presented to councillors on last month. The report, seen by The Source on Thursday, showed that 11 managers pocketed over 200,000, in non-taxed monthly allowances, which amounted to $2,4 million in 2012.

Town clerk Obert Muzawazi reportedly receives $32,252 in non-taxed monthly allowances, while the human resources manager Aaron Chemvura and acting health officer Simon Mashavave are reportedly pocketing $22,867 and $19,480, respectively.

“Audit examination revealed that the following benefits were not disclosed on payroll for tax purposes; holiday allowances, rentals, school fees, electricity allowance and housing benefits,” said UDCorp in the report.

“Council is violating a statutory requirement and this is a tax evasion. Prejudicing the tax authority results in the accrual of a tax liability that will negativity affect the council’s cash resources as the Zimbabwe Revenue Authority (ZIMRA) can garnish the organisation to recover the debt accrued in the form of unremitted on tax fringe benefits.”

UDCorp said the council was violating the Chapter (23:06) section 8 of the Income Tax Act that binds the employer to disclose all the fringe benefits accruing to the employees, noting that Zimra had carried out an audit on the council last year and made a similar observation.

Mayor Tatenda Nhamarare said the council has yet to discuss the report.

“I cannot comment on the report until it has been discussed by the full council meeting. It was presented to the council’s committee meeting which is still deliberating on it,” he told The Source.

Last year, the council recorded a budget overrun of 63 percent, spending nearly $30 million against the projected $19 million while missing its revenue collection target, which Nhamarare blamed on overstaffing and debts.