Taxpayers are compelled by the tax law to provide significant amounts of information to revenue authorities about their income, expenditures and business affairs. The information may be provided through tax returns, assessments or other correspondents or documents which a tax authority may request from time to time. On the other hand, the law gives the Commissioner General of the ZIMRA with unlimited powers to demand full information in respect of any person’s liability or any matter relating to the collection of such tax. The information to which he can access ranges from any deeds, plans, instruments, books, records, accounts, trade lists, stock lists or documents he may consider necessary for the purposes of tax administration. Of concern is how safe the information submitted to the Revenue Authority is and whether such information will not be disclosed to third parties without the consent of the taxpayer. When taxpayers provide their information they expect it to be kept confidential. Also, compliance with tax laws is more likely if taxpayers know that the information they provide can only be used for limited purposes. In order to maintain taxpayer privacy and confidence, there are secrecy provisions which impose strict obligations on tax officers and others who receive tax information.
Powers of the Commissioner
Any person who is employed to administer taxes, authorised to receive payment of any revenues or to examine records under the control or in the custody of the Commissioner-General, is empowered to maintain secrets and aid in keeping secret all information coming to their knowledge in the exercise of their functions. The person shall not, except in the exercise of his functions or unless he is required to do so by order of a competent court, communicate the information so obtained to any person who is not the taxpayer or the representative of the taxpayer. This entails that no person other than the taxpayer or his representative or a person to whom information relates is entitled to have access to any record under the control or in the custody of the Commissioner-General which contains affairs of taxpayers unless permitted to do so by a competent court. The Commissioner can also disclose information if it is required by the Minister for statistical purposes. He is not bound by secrecy provisions in relation to a taxpayer or any other person who is convicted of a tax offence in respect of which all appeal or review proceedings relating to the offence have, within the period allowed, been completed or not instituted. Officers who work under the authority of the Commissioner are required to take a secrecy oath before the magistrate, justice of the peace or commissioner of oaths to guarantee safety of taxpayer’s affairs prior to exercising their functions. If the officer then discloses information to other people and not the taxpayer, during the course of his duties after taking the oath, or uses the information for personal gain he shall be guilty of an offence.
Although taxpayers may be guaranteed confidentiality with regards to information in the custody of the ZIMRA, the same cannot be expected with regard to information held by other government officers or third parties when it comes to tax matters. The taxpayer’s right to privacy could also be affected by the provisions of the Interceptions of Communications Act (Chapter 11:20). According to this Act, the Commissioner General is an authorised person qualified to apply to the Minister for a warrant to intercept any relevant communication for the purposes of administration of fiscal matters. It is empowered to intercept mail, emails, telephones, etc. on application to the Minister. He should state in the application certain information, for instance the period for which the interception is to be effected, the target person for the interception among others. Nevertheless, the Minister should be satisfied that there are reasonable grounds that the gathering of information concerning an actual threat to any compelling national economic interest is necessary.
The Commissioner has power to demand any information deemed to be necessary for proper investigation including the appointment of banks and third parties as agents for payment of taxes owed by a taxpayer to the ZIMRA. This authority invalidates any secrecy provisions that may be held between a bank and its client or between third parties. Even the international agreements such as OECD Model Convention stipulate that bank secrecy cannot form the basis for declining to provide information. Zimbabwe’s tax treaties also support disclosure of information by competent authorities under the Exchange of Information Article where disclosure relates to taxes covered by the treaty and is necessary to administer or enforce domestic tax laws of the requesting country. The Exchange of Information Article that forms a part of all tax treaties to which Zimbabwe is a party, recognizes the importance of protecting taxpayer information. It ensures that information communicated under the treaty’s provisions is treated as a secret under the domestic laws in the receiving state and sanctions are governed by the laws of that state. Current disclosures of protected information to international jurisdictions would be maintained under the new framework. However, any information received should be treated as confidential. Most international taxation model conventions provides that the information received may be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment, collection and enforcement of the taxes covered by the Agreement (including the prosecution or the determination of appeals) and the information may be used only for such purposes. Information may not be disclosed to any other person or third jurisdiction without the express written consent of the competent authority of the requested party.
The integrity of information request is often compromised if the ZIMRA loses information that the taxpayers has given them. This places doubt on the safe custody of the information provided. However, taxpayers should know that they cannot do anything about denying ZIMRA access to information because this could result in the Commissioner making estimated assessments. The only remedy is to ensure the information requested has been recorded and signed for by the ZIMRA officials before it is given out. Nevertheless, the ZIMRA officers take the secrecy oath before commencing their operations as liaison officers. This oath guides their conduct to ensure that taxpayer’s privacy is not violated. If this provision has been breached you can sue for breach of confidentiality unless the information was revealed in special circumstances whereby the officers may be required by a competent court to reveal certain information. Standardization of the tax secrecy and disclosure provisions would require one maximum penalty (being a monetary fine or an imprisonment term) for all unauthorized disclosures, except where a departure is warranted. Current tax secrecy provisions allow disclosure in the ‘course of duties of an officer’.