As the broke Zimbabwean government seeks to seize every cent it can lay its hands on, the Zimbabwe Revenue Authority (Zimra) will tax specific classes of donations to beef up the fiscus.
The tax collector said even though donations are not incurred for the purposes of trade or in the production of income, there are circumstances under which such are taxed.
According to Zimra, donations to the National Scholarship Fund, the National Bursary Fund – a charitable trust administered by the minister responsible for Social Welfare or the minister responsible for Health – are liable to tax and there is no limit to the amount.
The principle also applies to funds to any one of the following, provided it is approved by the minister responsible for Health:
i. Purchase of medical equipment for a hospital operated by the State, local authority or religious organisation.
ii. Construction, maintenance or extension of a hospital operated by the State, local authority or religious organisation.
iii. Procurement of drugs to be used by a hospital operated by the State, local authority or religious organisation. In such cases, the maximum allowed as a deduction is US$100 000.
Zimra also said a research institution approved by the minister responsible for Higher and Tertiary Education is also taxable, with the maximum amount allowed as a deduction pegged at US$100 000.
The tax collector also said public private partnership funds, otherwise known as PPPs, are subject to this requirement with the amount allowed as a deduction pegged at US$50 000.
Also among those that can be taxed is the Destitute Homeless Persons Rehabilitation Fund, established under the ministry of Finance, which has an allowed maximum reduction of US$50 000.
Zimra said clients who made wrong treatment of donations or have made other errors or omissions in their tax declarations must make a voluntary disclosure to the taxman to have penalty waived in full.
“…the law provides for the deduction of certain donations under prescribed conditions. Section 15(2) (r) to 15(2) (r5) of the Income Tax Act [Chapter 23:06] stipulates the circumstances in which donations are allowed and the maximum amounts that can be deducted…,” Zimra said in a statement.
Government has been struggling to make ends meet and is using every means necessary to get revenue through Zimra.
Recently, Treasury introduced a two percent tax on every electronic transaction beyond $10 in a bid to raise funds to pay off some of internal and external debts.
Besides this unpopular new tax which received widespread condemnation when it was introduced in October last year, government also started demanding payment of duty for imported motor vehicles in foreign currency.
Previously duty on imported vehicles was paid through the bond note or through the virtual Real Time Gross Settlement (RTGS) system.
Members of the public have also criticised government’s double-standards and hypocrisy as other services are paid through RTGS and the bond note, which is touted as being at par with the United States dollar although on the parallel market, the value of the surrogate currency is down thrice the USD’s worth.
The bond note has found itself on a slippery slope after government announced new fiscal and monetary policies, which demand the creation of separate foreign currency accounts from that of the RTGS and the surrogate currency.
Many observers believe government is desperate to raise funds by hook and crook in a bid to patch the ballooning debt, exacerbated by the printing of large sums of Treasury Bills.
To its credit, Zimra has been surpassing its targets over the years and has been partaking in campaigns to conscientise taxpayers on the need to voluntarily contribute to the government’s purse.
It has further been plugging leakages through putting mechanisms that effectively deal with corruption within its workforce and implementing lifestyle audits to weed out any possible underhand dealings.