SPB boss racks up $1m tax arrears

via SPB boss racks up $1m tax arrears | The Herald March 30, 2015

THE Zimbabwe Revenue Authority has garnished the State Procurement Board’s bank account to recover over $1 million owed by the board in PAYE for its chairperson Mr Charles Kuwaza.

SPB has not been remitting PAYE on Mr Kuwaza’s earnings since 2009 and last week Zimra garnished the SPB’s CBZ account in a bid to recover the tax arrears.

All the other employees of the SPB have had their earnings taxed and the PAYE sent to Zimra. The Herald last year published Mr Kuwaza’s mega perks, excluding salary, which gobbled about $210 000 in 2014 alone.

Zimra has been demanding that Mr Kuwaza settle his tax arrears, but his reluctance has led to the garnishing of the SPB account, a development that could affect the board’s operations.

Zimra has since last year taken steps to ensure that all due taxes are paid following the unravelling of the “salarygate” scandal where top executives at some State enterprises gave themselves huge untaxed allowances.

Correspondence seen by The Herald shows that Zimra garnished the SPB account after Mr Kuwaza refused to comply with a request from the tax collector to provide a payment plan.

In a letter written to CBZ last Friday, a Zimra official Mr Shelton Chigumira ordered the bank to send Zimra $1, 019, 251.90 from the SBP accounts.

“CBZ could not pay the money to Zimra since there was a balance of about $230 000 in its two accounts.

Sources said Zimra early this month gave the SPB two weeks to come up with a payment plan.

But Mr Kuwaza wrote to Zimra Commissioner Investigations and International Affairs Mrs A. Mutombodzi two weeks ago complaining why The Herald published a story about his tax liabilities last year.

“As you recall, the alleged Tax Liability for 2014 was published in The Herald in circumstances which were designed to denigrate my person,” said Mr Kuwaza.

“Unfortunately, certain officers in this office appear to have worked in cahoots with The Herald. The Director of Finance, Mrs S Thodhlana, explained that the soft copy of the PAYE Bill was sent to us via e-mail without any encryption.

“I asked her why this sensitive detail was dispatched in that manner, but she had no credible response. I concluded that certain persons had been hired to assassinate my character. I have yet to see Zimra taking The Herald to task for publishing our alleged liabilities in contravention of the Income Tax Act.”

In an emailed response to The Herald last week, Mr Kuwaza said tax matters were confidential.

“Your continued publication of any such details is illegal as it violates provisions of the Income Tax Act,” he said. “Could you verify the facts with the Chief Secretary to the President and Cabinet who administers the Procurement Act.”

But sources at the SPB said Mr Kuwaza was reluctant to pay tax since dollarisation, claiming that his contract was signed by the President.

“Kuwaza told the (SPB) director of Finance that he wants all his money that is not taxed because his contract is with the President,” said the source.

“As it stands, all of us except him, pay tax. There are high chances that we are not going to have salaries this month because of the garnishee order. The challenge now is that SPB will be forced to pay for his tax liabilities.”

Another source added: “Kuwaza is using all the company cars, he has a company house, he had repairs to the company house in excess of $200 000 that are taxable. He is also claiming board fees when he is on salary, increasing his tax obligation.

“In that case, Zimra needs to audit the source of the tax arrears to avoid prejudicing staff who were religiously paying their tax dues.”

A procurement expert who spoke to The Herald on condition she is not named said Mr Kuwaza was in breach of good corporate governance.

“In terms of the Income Tax Act, only public service benefits processed by SSB are essential service exempted from tax according to the Office of the President and Cabinet,” she said.

“SPB salaries and benefits are from revenues collected using administration fees as per Statutory Instrument 171 of 2012 and are therefore liable for tax. The board chairperson must just pay his tax dues without wasting time.

“However, the State should be vigilant to ensure public funds are then not abused to settle an individual’s liabilities.”