No Where to Run To? FDMS and TaRMS : ZIMRA Fighting Tax Evasion.

That’s a powerful statement that perfectly captures ZIMRA’s intent with this massive digital transformation! The integration of FDMS and TaRMS is indeed creating an environment where tax evasion becomes much harder, riskier, and more difficult to sustain.

The core reason why there is “no where to run” lies in the systems’ ability to move beyond self-declared tax returns and into data matching and real-time verification.

Here is a brief summary of why these systems are so effective at reducing tax evasion:

1. Data Matching Closes the Evasion Gap

The most significant anti-evasion measure is the direct reconciliation of records between different parties and systems.

• Supplier vs. Buyer Reconciliation (The VAT Loop):

  • Old Way: A buyer could claim Input VAT on a bogus or non-fiscal invoice, and the supplier’s return was rarely cross-checked against that claim immediately.

  • New Way: The buyer’s claim for Input VAT in TaRMS can only be valid if the supplier has submitted the corresponding Output VAT data via their Fiscal Device to FDMS. If the data doesn’t match, the Input VAT is denied, and the supplier is flagged for under-declaring sales.

• Customs Data Reconciliation:

  • TaRMS integrates with ASYCUDA (the customs system). This allows ZIMRA to automatically reconcile the Input VAT claimed on imported goods against the duties and VAT actually paid at the border. Any discrepancy signals an attempt to under-declare imports or falsely claim input tax.

2. Eliminating Under-Declaration of Sales

The mandatory use of Fiscal Devices (FDMS) directly attacks the most common form of tax evasion: hiding cash sales.

• Real-Time Monitoring: Every transaction processed through a certified fiscal device is electronically transmitted to ZIMRA’s server. Taxpayers can no longer use the “second book” or manually adjust their sales figures before submitting a return.

• Automatic Audit Flags: TaRMS uses this real-time sales data to monitor trends. If a business’s sales figures suddenly drop significantly without a logical explanation (e.g., closing a branch), the system automatically flags the taxpayer for a prompt audit.

3. Automated Penalties and High-Risk Deterrence

The speed and severity of penalties act as a powerful deterrent, making the cost of evasion prohibitively high.

• Automated Interest: Interest and penalties are calculated and applied automatically to the ledger daily, removing the delay that previously allowed evaders to use the unremitted tax money interest-free.

• Instant Tax Clearance Denial: Non-compliance (like failing to use a fiscal device or not remitting sales data) immediately results in the denial of the Tax Clearance Certificate (ITF263) via the TaRMS portal. Losing this certificate immediately blocks a business from formal tenders, government contracts, and dealing with compliant suppliers, essentially forcing them to the fringes of the formal economy.

The combined effect of these systems is a significantly narrower escape route for tax evaders, pushing greater compliance across the formal sector in Zimbabwe.

That is an absolutely accurate assessment. The combination of TaRMS and FDMS is designed to eliminate the historical weaknesses that made tax evasion possible in Zimbabwe’s formal sector.

The statement, “No where to run,” is backed by the fact that ZIMRA is moving from a system of retrospective, paperwork-dependent audits to one of Continuous Transaction Controls (CTC).

Here is a breakdown of the key reasons why this digital transformation is making life extremely difficult for tax evaders:

1. The Death of the “Second Book” (FDMS)

Tax evasion often starts with a deliberate understatement of sales, particularly cash sales. FDMS makes this maneuver virtually impossible:

• Real-Time Sales Audit: The Fiscal Devices are no longer just cash registers; they are ZIMRA’s eyes at the point of sale. Every transaction is recorded, digitally signed, and transmitted to the FDMS server. This means ZIMRA possesses the true record of a business’s sales before the business owner even sits down to file their return.

• Inventory Control Layer: ZIMRA is introducing an inventory control element via FDMS. By tracking stock levels and movements, the system can flag discrepancies where a business has demonstrably acquired and sold more stock than is reflected in its fiscalised sales data. This is a powerful tool against under-reporting and VAT fraud.

• Invoice Validation: Every fiscal invoice now carries a verifiable QR code linked to the FDMS record. Buyers are incentivized to validate this code, as a non-validated invoice cannot be used to claim Input VAT, effectively forcing suppliers to report all sales truthfully.

2. The Unbreakable VAT Loop (TaRMS-FDMS Integration)

The integration is a masterpiece of anti-evasion design, primarily targeting fraudulent Input VAT claims.

• Automated Cross-Verification: The system automatically cross-matches:

  • Output VAT (Supplier’s Sales): Data recorded in FDMS.

  • Input VAT (Buyer’s Purchases): Claimed on the buyer’s TaRMS return.

• Pre-filled Schedules: TaRMS uses the FDMS data to generate the buyer’s Input Tax Schedule. If a purchase is not in ZIMRA’s FDMS database (because the supplier didn’t report the sale), the Input VAT claim is not automatically available. This forces the buyer to either forgo the claim or face intense scrutiny by manually entering a potentially non-compliant invoice.

3. Integrated Visibility and Audit Speed

TaRMS acts as the central hub, consolidating data from multiple government sources, giving ZIMRA an unprecedented 360-degree view of the taxpayer.

• Customs Data (ASYCUDA): TaRMS integrates with the customs system. If a company claims high input tax on imported goods, ZIMRA can instantly verify the duties and VAT actually paid on the Bill of Entry via the TaRMS ledger, clamping down on fraudulent import claims.

• Government Database Integration: Integration with the Registrar of Companies and banks allows ZIMRA to instantly cross-reference ownership, corporate activities, and financial transactions, making it harder to hide assets or income streams across related entities.

• Enforcement Speed: TaRMS automatically detects unpaid liabilities, calculates interest and penalties daily, and issues instant reminders. The lag time that tax evaders relied on to manage their liabilities is gone.

The evidence suggests this strategy is working. ZIMRA’s own reports have indicated that the focus on digitisation and systems like FDMS have contributed to improved VAT collections on local sales, surpassing targets in recent periods (e.g., H2 2024 VAT on Local Sales surpassed its target by 88%).

The future for the Zimbabwean taxpayer is one where accuracy, transparency, and timely reporting are the only viable options.