Business laments abuse of Zimra’s whistleblower facility

BUSINESSES have lamented rampant abuse of the Zimbabwe Revenue Authority’s whistleblower facility. A new breed of “entrepreneurs” is taking advantage of low tax compliance to misuse the whistleblower facility and benefit from the 10 percent “reward”.

The whistleblower facility was put in place for purposes of recovering lost revenue by unscrupulous and uncooperative companies or individuals.

It is open to members of the public, except Zimra officers, to come forward to Zimra with tangible information which enables the authority to recover revenue that otherwise would have been lost had the whistleblower not come forward.

Addressing participants at the Zimbabwe National Chamber of Commerce (ZNCC) Breakfast Meeting on the tax environment in Zimbabwe, the representative body’s branch chairperson Mike Kamungeremu highlighted the growing problem.

“There is a big problem that is emerging in our economy, and this is the problem of whistleblowers. Originally that policy was meant for Zimra to know what is happening somewhere in terms of prejudicing of tax revenue. But what is happening of late is that there are now some people who have become professional whistleblowers, people who are now in the business of whistleblowing.

“This is reality and I urge our members to be on high alert. What these people do is they go through your employees. They target finance managers, accountants, tax consultants.

“They go to those people and say give us information and they offer money for that. And if information is readily available and the company has been defaulting then the whistle is blown on them,” said Mr Kamungeremu.

“On the other hand we have seen cases where employees connive with these professional whistleblowers to falsify company information. Some of the numbers are so huge that an accountant can say that if I do this once I can get my five-year salary. This has become a serious problem.

Zimbabwe adopted comprehensive whistleblower laws for tax purposes in 2001, which are enshrined in the Zimra Act (Chapter 23:11) under Section 34 B.

According to Section 34 B, subsection 2 of the Act, the commissioner-general may, with the approval of the finance minister, award any person, not being an employee of the authority, or a near relative of an employee of the authority, a monetary reward for information provided or any measure taken which results in detection of smuggling or any illegal and underhand activities and of the recovery of revenue which would otherwise have been lost.

The Act rewards whistleblowers who tip-off with 10 percent of the total tax revenue and penalties recovered as a result of whistle blowing information provided.

Under the amnesty programme, companies and individuals are now required to disclose all tax irregularities relating to covered taxes.

But in view of its rampant abuse, indications are that the whistleblower facility could be ceased.

Zimra commissioner-general Faith Mazani said the tax collector was aware of the abuse of the facility and had since engage the Ministry of Finance and Economic Development over the matter.

“You are right. That is an area that is also a problem for us. It’s an area that parastatals and big corporates have been targeted because that is where the big money is. Some of our audits of some of these companies show figures upward of $20 million,” said Ms Mazani.

“Ten percent? Clearly an industry exists there. What we have discussed with the relevant Ministry is that there is need to repeal it as this was never the objective of the whistleblower facility.

“All things being equal, businesses themselves should be giving us the information, not whistleblowers.”