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ZIMRA Domestic Taxes Commissioner, Mr. Misheck Govha

Tax Efficiency, ZIMRA Launches Employee Management Module

By Shingirai Vambe

The Zimbabwe Revenue Authority (ZIMRA) has launched an Employee Management Module under its TaRMS platform, set to take effect with the January 2025 PAYE Return. This new module aims to streamline employee registration and earnings declaration, making tax processing more efficient for employers.

According to ZIMRA Domestic Taxes Commissioner, Mr. Misheck Govha, “The Employee Management Module will provide a platform for entities to register employees, declare earnings, and automatically compute taxes. Each registered employee will receive a Tax Identification Number (TIN), while existing registrants will retain their TINs.”

The module features Comprehensive Employee Registration, Flexible Registration Options, Additional Tax Credits, and Auto-filling of PAYE and AIDS Levy. Employers can register employees individually or in bulk using the Employee Upload Function. To benefit from the Comprehensive Employee Registration, employers must declare essential employee information, including marital status, disabilities, and date of birth, to automatically grant applicable tax credits.

Zimbabwe’s economic instability poses significant challenges to tax compliance. High inflation, currency fluctuations, and cash shortages can make it difficult for taxpayers to meet their obligations, while the government’s reliance on taxes to fund public services and infrastructure can lead to a culture of tax evasion. Despite these challenges, there are efforts underway to improve tax compliance in Zimbabwe, the Post can report.

The government has introduced tax reforms aimed at simplifying the tax system, reducing tax rates, and increasing tax exemptions. ZIMRA has also launched tax education and awareness programs to inform taxpayers about their obligations and benefits.

ZIMRA introduced digital platforms for tax registration, filing, and payment to improve efficiency and reduce compliance costs. The authority has also collaborated with stakeholders, including taxpayers, accountants, and lawyers, to improve tax compliance and address challenges. Improved tax compliance can have significant benefits for Zimbabwe. Increased revenue can be used to fund public services and infrastructure, while reduced tax evasion can promote a fair and equitable tax system. Improved tax compliance can also contribute to economic stability by reducing the fiscal deficit and promoting investment.

However, this development comes amidst significant tax and economic challenges facing Zimbabwean citizens. The country’s economy is largely informal, with over 70% of economic activities occurring outside the formal sector. This has resulted in significant revenue losses for the government and a lack of trust in formal institutions.

Furthermore, the tax system is complex, with numerous and high taxes affecting citizens. The government has introduced measures to enhance tax compliance, including a 5% withholding tax on non-registered Micro and Small Enterprises (MSMEs) and reducing the VAT registration threshold. However, these efforts are hindered by systemic issues such as poor governance, inadequate infrastructure, and the high cost of doing business.

High taxes in Zimbabwe have indeed contributed to a culture of tax evasion and corrupt tendencies. When taxes are excessively high, taxpayers may feel compelled to seek ways to avoid or evade paying them, leading to a range of negative consequences. One of the primary drivers of tax evasion in Zimbabwe is the high tax burden. With taxes accounting for a significant portion of the cost of doing business, many taxpayers feel forced to evade taxes in order to remain competitive. This can lead to a vicious cycle of tax evasion, as taxpayers become increasingly creative in their efforts to avoid paying taxes.

According to economist, Steve Hanke, said, “high taxes have also contributed to corrupt tendencies in Zimbabwe. When taxes are high, taxpayers may be more willing to engage in corrupt activities, such as bribery or fraud, in order to reduce their tax liability. This can lead to a culture of corruption, where taxpayers and tax officials collude to evade taxes.”

ZIMRA encourages taxpayers and employers to familiarize themselves with the new Employee Management Module to ensure compliance and a smooth transition. However, addressing the underlying economic and tax challenges will be crucial to the success of this initiative.