Every year, hundreds of thousands of taxpayers end up in debt with ZIMRA because of under reporting or underpaying their taxes whether by mistake or on purpose.Owing ZIMRA can be stressful and worrisome, especially if they place a garnish, lien or levy on your assets or property. But you’re not alone – there are tax debt resolution services that can help you.
What is tax debt?
If you’re not able to pay the tax you owe by your original filing due date. The balance is subject to interest and a monthly late payment penalty. It means you are creating debt with ZIMRA.
There are many options to help reduce, and in some cases eliminate, tax arrears, ranging from filing or correcting a tax return to arrangements like penalty abatement, installment agreements, or offers in compromise.
Do you owe ZIMRA money? Here are some things you need to know.
Owing the government tax money can be frightening , but understanding the basics is one way to make the process a little easier. There are a few different ways to find out how much you owe ZIMRA, including online, by phone, at ZIMRA office, or by mail. ZIMRA has many options to help you pay your tax debt, including reducing the debt through filing, or correcting, an already filed tax return. If it becomes too much, don’t hesitate to get help from a professionals like Lucent Consultancy.
Does tax debt have a statute of limitations?
As part of our law creditors are barred from making claims beyond a certain period. More precisely, the Income Tax Act prohibits the Commissioner from raising assessments on taxpayers beyond 6 years except in exceptional circumstances.In turn, taxpayers are also prohibited by the same Act from raising claims against the State after the expiry of six years prescription period.
Businesses need to be certain, beyond a certain period there will not be some surprise claims from the State. In Road Accident Fund & another v Mdeyide [2010] ZACC 18; 2011 (2) SA 26 (CC) the judge stated that “… The realities of time and human fallibility require that disputes be brought before a court as soon as reasonably possible … If a claim is not instituted within a fixed time, a litigant may be barred from having a dispute decided by a court…” If a claim is delayed, it damages the interests of justice, thereby prolonging the uncertainty of all concerned about their affairs. Witnesses may no longer be available to testify or their memories could have faded and become unreliable.
Documentary evidence may have disappeared or even archived. This point holds truth because our law requires documents to be kept for a minimum of 6 years.
What are ZIMRA penalties for underpayment?
If you didn’t pay your taxes, or if something went wrong with your return, you may have outstanding debt. With effect from 1st December 2022, interest on Tax Debts were increased from 25% to 200%.
This was aimed at “companies which were no longer prioritizing remittance of tax to ZIMRA, preferring to use it as a cheaper source of working capital. The interest rate on foreign currency tax debts remained at 10% per annum.”
