A NEW dawn beacons at the tax office of the country, Zimra. The Tax and Revenue Management System (TaRMS) goes live today. TaRMS is a business re-engineering process committed to simplifying corporate operations for taxpayers’ benefit. Tax revenues are central to Zimbabwe’s national development and the attainment of the country’s vision of being a middle-income economy by 2030.
As a result, Zimra’s operations must be re-engineered to facilitate efficient and effective revenue collection. TaRMS replaces the SAP TRM for automating domestic tax activities. While offering services to taxpayers via SAP TRM under the Domestic Taxes Division, Zimra discovered a number of system difficulties, hence necessitating an upgrade. TaRMS is expected to drive up taxpayer registrations, improve the registration process, expand the taxpayer base, capture ITF 12B (QPDs), improve refunds management, tax return management, payment and debt management systems. The new system will be released in three stages on three different dates. The first phase will be the front end, with 80 percent of the program being delivered today. The second stage will be the installation of the Tax Agent Module, which will be live on December 1. The third phase, which will include the back end, will go online on August 1, 2024.
It is expected TaRMS will have better features and functionalities compared to the outgoing SAP and there is no doubt that it will boost domestic revenue mobilisation. Zimra identifies various advantages of utilising the TaRMS system over the traditional SAP system. The enhancements are roughly classified as taxpayer registration, tax return administration, payments management, refunds management, and debt management.
In registration, Duplicate Business Partner Numbers will be eradicated, there will be an online validation of company registration numbers integrated with Registrar of Companies, banks, and civil registry, Taxpayer Identification Number (TIN) and tax types registration will be automatic for all entities, the system will offer a self-service portal “SSP” that can save uncompleted taxpayer’s registration applications that can be completed later.
Integration with Registrar of Companies will assist Zimra to grow its taxpayers’ base as all registered companies will be automatically registered in TaRMS. The use of manual registrations forms will now be eliminated through use of electronic forms on TaRMS. Taxpayers can update master data through SSP without requirement for Zimra’s intervention on editable fields. Taxpayers will use one TIN for both US$ and Z$, submit one return per tax period and post-tax obligations in both Z$ and US$, which is easy for the taxpayer. Except for those that are partially automated, such as capital gains on entities or individuals with diplomatic immunity, all returns/claim forms are totally automated. The solution will eliminate the problem of unallocated payments in Zimra bank accounts, as well as the need for suspense accounts.
The taxpayer’s ledger will be automatically maintained by TaRMS. It will automatically identify refunds for processing, assess any outstanding liabilities (returns and payments), discover unpaid obligations, and maintain accounts automatically since a tax liability reported on the return is settled straight from the single account. The system will calculate interest on a daily basis, update and display the amount in the taxpayer ledger and post penalties from the due date to the taxpayer ledger. If the taxpayer has made any necessary corrections, the system will be able to automatically reverse interest and penalties on any adjusted/amended tax liabilities. It will send reminders for payments and returns prior to, on, and beyond the due date, based on the escalation methods.
Because Zimbabwe is designated as a multi-currency economy, TaRMS will only have two currencies: US$ and Z$ however, if one’s currency of trade is different from the mentioned, it must be converted to US$, but just for tax reporting purposes. Zimra will only accept payments in either Z$ or US$ i.e., if one trades in pounds, they have to convert their currency to US$ for payment of taxes.
E-services and e-tax will be phased out today. TaRMS will not necessarily amend the legislation. Refunds will be issued automatically, with the exception of those who exceed a specified threshold. Domestic payments will be processed online using domestic bank cards, buttressed by Zimra’s collaboration with Zimswitch. Persons dealing with agents, as well as agents dealing with persons, must enter individual email addresses so that the TIN can be delivered directly to the individual. Otherwise, the TIN will be mailed to the current address.
As with any new system that is implemented, there will be some flaws here and there. The current tax structure already presents certain difficulties for taxpayers. Complex tax regulations, complicated paperwork, and a lack of transparency have frequently led to taxpayer misunderstanding and dissatisfaction. The implementation of a new tax system should solve some of these concerns while also providing a more user-friendly experience. The revenue management system is intended to improve revenue management by streamlining tax collection. It intends to automate tax operations, improve efficiency, and limit the potential for fraud by integrating technology. However, the successful deployment of such a system is strongly dependent on taxpayers’ willingness to adjust to the changes, as well as the authority’s financial readiness to completely finance the system and manage its operations.
In summation, to be fully prepared for the system, taxpayers must collaborate with Zimra, attend training sessions, and follow all of their social media handles to stay up to date on developments and communicate any potential challenges they anticipate so that Zimra can either address them or reassure them that everything is in order. Backups by taxpayers of old data are critical moving into a new system to avoid disappointment.
The new system promises to be fantastic and we hope it is not the same promise offered by all promoters of new systems. Our hope is that the promoters will leave to their billing and the government will commit resources to make the project a success. Does TaRMS offer a complete digitalised tax system capable of delivering features such as e-filing, e-matching, e-auding, e-accounting and e-assessing? Watch out for our follow up article next week.
Meanwhile, Matrix Tax School will be hosting its Summer School under the theme: “Managing compliance in the middle of the storm” from October 18-20, 2023 at Leopard Rock Hotel, Vumba Zimbabwe.
Tapera is the founder of Tax Matrix (Pvt) Ltd and the chief executive of Matrix Tax School. He writes in his personal capacity.