ZIMRA 2017 REVENUE FOCUS AREAS

COLLABORATED SEMINAR BETWEEN ICAZ AND ZIMRA

26 JANUARY 2017

RAINBOW TOWERS

ZIMRA’S MANDATE

The Authority’s mandate is derived from Section 4 of the Revenue Authority Act (Chapter 23:11) where the Acts administered by ZIMRA are:-

Capital Gains Tax Act (Chapter 23:01)

Customs and Excise Act (Chapter 23:02)

Finance Act (Chapter 23:04)

Income Tax Act (Chapter 23:06)

Stamp Duty Act (Chapter 23:09)

Value Added Tax Act (Chap 23:12)

The Authority also enforces legal provisions, by extension from other

Government Ministries & Bodies

VISION & MISSION STATEMENTS

VISION

“To be a beacon of excellence in the provision of fiscal services and facilitation of trade and travel.”

MISSION

“To promote economic development through efficient revenue generation, collection and trade facilitation.”

VALUES

Integrity, Transparency and Fairness

ZIMRA SPREAD in ZIMBABWE

ZIMRA’s initiatives under both Customs & Excise and Domestic Tax:-

• Automation of systems and procedures

• Upgrade of Systems already in place

• Simplification of procedure (internal & external clients)

• Internal skills development and capacity building

• Client education

• Stakeholder engagement

WHAT ZIMRA HAS DONE

• ASYCUDA World upgrade (imports and exports declaration processing)

Web based direct trader input (DTI)

Centralized declaration procession (24/7 Data Processing Centers - DPCs)

• Non-intrusive cargo/goods inspection systems (NIIT – Non-Intrusive Inspection Technology)

Canine (K9) unit – Biological NIIT (sniffer dogs)

X-ray baggage and cargo scanners at ports of entry (borders posts & airports)

• Border Efficiency Management Systems (BEMS)

• Cargo tracking

AUTOMATION & OTHER INITIATIVES UNDER CUSTOMS & EXCISE

BORDER EFFICIENCY MANAGEMENT SYSTEMS (BEMS)

• Initiatives to decongest border posts (esp. the busy ones)

• Improve efficiency on border processesTraffic segregation and separationSingle window conceptExtended hours of operation at selected ports of entry

• Removal of processes considered trade barriers

• Establishment of transit sheds, bonded warehouses, transit bonds

• One Stop Borders Post concept (OSPB)

• Simplified Trade Regime (STR)

• Pre-clearance procedures

• Cargo escorts (expedited controlled delivery)

• Authorized economic operators (AEO) concept

• Post clearance audits (PCA) at inland ports

• Advance cargo manifest and information exchange

• Risk management principles for selectivity

• Liaison with other state agents and bodies (JOC, ZRP,OPC)

• Mutual Administrative Assistance agreements with Customs Administrators in adjacent countries

BORDER EFFICIENCY MANAGEMENT SYSTEMS(BEMS) cont’d

AUTOMATION & OTHER INITIATIVES UNDER DOMESTIC TAXES

SAP TRM System upgrade

• E- registration

• E-filing

• E-banking

• Self-assessment

• Invoice Management (Fiscalisation)

• Establishment of client call centers

• Client segmentation

• Satellite offices for ease of accessibility

• Client contact through internet and ZIMRA website

OTHER ZIMRA CLIENT FOCUSED INITIATIVES• Establishment of industry/sector specific liaison officers

• ZIMRA to Business forum

• Tax payer appreciation initiatives

• Conduction of workshop & client education across the country

• Participations at exhibitions and other trade forums

• Focused corporate social responsibility initiatives

• Embrace of best practice and sound corporate governance

• ISO Certification and Quality Policy (improvement of service delivery)

• Other modernization projects across the organization’s divisions

• Current tax “amnesty” for SMEs who register before 30 June 2017

COMPLIANCE

Compliance is a critical component of taxation – voluntary compliance

Non compliance may lead to delays in processing of (customs or taxes) declarations submitted by clients – attract penalties and interest.

Examples of common non-compliance issues are:

Failure to register for tax purposes

Lack of or poor record keeping

Failure to remit taxes

Delayed tax remittances

Non submission of tax returns or delayed submission

Failure to fiscalise operations

False declarations/Incomplete declaration/Tax Evasion

Externalization of income/profits

DOUBLE TAX AGREEMENTS AND PROVISIONS THEREIN

• DTAs apply only to residents of one of the treaty states or both as suchthird parties cannot benefit therefrom.

• Absence of treaties could lead to tax treaty shopping i.e. artificialcreation of an entity in another state with the main or sole purpose ofobtaining treaty benefits which would not be available directly to such aperson.

• Permanent Establishments, With Holding Taxes,

DTAs & ASSOCIATED POTENTIAL RISK

•DTAs apply only to residents of one of the treaty states or bothas such third parties cannot benefit therefrom.

• Absence of treaties could lead to tax treaty shopping i.e.artificial creation of an entity in another state with the main orsole purpose of obtaining treaty benefits which would not beavailable directly to such a person.

BASE EROSION & PROFIT SHIFTING (BEPS)

• Refers to tax planning strategies that exploit gaps and mismatches in tax rules toartificially shift profits to low or no-tax locations where there is little or no economicactivity, resulting in little or no overall corporate tax being paid.

• Fifteen actions to equip governments with the domestic and internationalinstruments needed to tackle BEPS were adopted by OECD countries.

• Attention will be paid to BEPS issues as RISK to revenue abounds in these matters.

• BEPS is of major significance for developing countries

• Africa losses upwards of USD100 billion annually through illicit funds flows, includingamong other issues BEPS transactions.

BEPS ACTION PLANS

• Action 1: Addressing the Tax Challenges of the Digital Economy

• Action 2: Neutralising the Effect of Hybrid Mismatch Arrangements

• Action 3: Designing Effective Controlled Foreign Company Rules

• Action 4: Limiting Base Erosion Involving Interest Deductions andother Financial Payments

• Action 5: Countering Harmful Tax Practices More Effectively, Takinginto account Transparency and Substance

BEPS ACTION PLANS cont.

• Action 6: Preventing the Granting of Treaty Benefits in InappropriateCircumstances

• Action 7: Preventing the Artificial Avoidance of PermanentEstablishment Status

• Actions 8-10: Guidance on Transfer Pricing Aspects of Intangibles

• Action 11: Measuring and Monitoring BEPS

BEPS ACTION PLANS cont.

• Action 12: Mandatory Disclosure Rules

• Action 13: Guidance on Transfer Pricing Documentation andCountry-by-Country Reporting

• Action 14: Making Dispute Resolution Mechanisms MoreEffective

• Action 15: Developing a Multilateral Instrument to ModifyBilateral Tax Treaties

TRANSFER PRICING

• Transfer pricing - the setting of the price for goods andservices sold between controlled (or related) legal entities.

• MNEs have a lot of scope to misprice, under value or over valuetransactions to move profits to areas of their choice at non-arm’slength thereby shifting profits – these are the corner stoneactivities of transfer pricing.

• Transfer pricing is one of the BEPS methodologies used toshift profits from one tax jurisdiction to a lower tax jurisdiction.

OTHER REVENUE FOCUS AREAS IN 2017

• Fiscalisation and linking servers to the ZIMRA Server

• ITF 263s

• Harmful Tax Planning and Tax Avoidance Schemes

• Advance Tax Rulings (ATRs) & Objections

• With holding Taxes and Double Tax Agreements provisions

• Remuneration issues

• VAT

• Debt recovery & attachments etc.

• Registration of accountants and tax practitioners

• SME registration

• Any other area as deemed necessary

CORRUPTION

ZIMRA also has in place initiatives to ensure the following:-

Zero tolerance to corruptionToll free numbers for clients and good citizens

to report corruptionWhistle blower facility Pursuit of ill gotten gains and recovery of state

dues

THANK YOU