ZIMBABWE Revenue Authority executives — including under-fire Commissioner-General Gershem Pasi — evaded paying tax on some of their employment benefits, prejudicing the Government of hundreds of thousands of dollars.Ironically, it is Zimra’s mandate to collect revenue on behalf of the Government.
A forensic audit carried out by HLB Zimbabwe mid this year revealed that Zimra executives reneged on their obligations to contribute to the State purse.
“We observed that Zimra executive directors were not paying Pay As You Earn (P.A.Y.E) on some of their employment benefits such as their school fees, motor vehicles and holiday allowances,” reads the audit report.
“The benefits in question were grossed up (for tax purposes) and Zimra paid tax on behalf of the executive directors. This is not stipulated in their employment contracts, which specifically requires executives to pay their own taxes in compliance with the Income Tax Act.”
The auditors said Comm-Gen Pasi declined to pay his tax obligations arising from his unwarranted board fees between 2011 and 2013. The said fees were not taxed, in violation of the Income Tax Act. As a consequence, $9 119.37 in unpaid PAYE and Aids Levy accrued.
“When the error was discovered by the Human Resources (HR) department on the 24th of June 2013, Mr G. Pasi declined to settle the PAYE over a period of six months as suggested by H.R.
“Instead, he opted for PAYE to be recovered from his future board fees as and when they fell due. No penalties and interest was claimed from Mr G. Pasi, again in violation of the Income Tax Act.
“Our investigation also revealed that during the period under review, Mr G. Pasi received board fees in the sum of $16 200 in spite of the fact that he is not a Non-Executive Director of Zimra.
“In line with best practice executive directors are not entitled to board fees. We recommend that board fees should be paid to non-executive directors only,” said the auditors.
The auditors found that Zimra Director for Human Resources and Administration, Ms Christine Msemburi was one of the culprits who evaded paying tax during her secondment to the Regional Office for Capacity Building in Kenya from October 2012 to September 2015.
“Over the three year period of Ms Msemburi’ secondment, she earned income in excess of $850 000 from Zimra, which should have attracted income taxes approximately $350 000,” said the auditors. These taxes were never collected by
Zimra. Such non-collection was done without valid tax directives. Zimra has no proof that Ms Msemburi paid any taxes in Kenya, which should be the primary basis on which any tax credits could be afforded to the then HR director.
“In fact, Zimra only issued backdated tax directives in May 2015 contrary to practice (tax directives are prospective and not retrospective.
“These backdated directives were meant to legitimise Ms Msemburi’s non-compliance with tax laws over the preceding two and half years. This was clearly an abuse of office as any other tax payer in a similar situation would not have been allowed to violate the tax legislation without any action being taken by Zimra.”
The audit report revealed that Zimra executives earned about $15 million in salaries and employment benefits between December 2014 and May 2016. Herald