The Finance Act is one of the most crucial pieces of legislation in Zimbabwe as it guides businesses and the economy at large. Taxpayers look forward to the announcement of the Fiscal Budget and consequently the Finance Bill as it normally brings changes that affect them in their order of doing business. With the setting in of Covid 19, the Finance Bill 2020 has been stalled due to Parliament having to halt its sittings more frequently. The law-making process as envisaged in section 131 of the Constitution has up to 9 stages and this means it may take a bit of time before the Finance Bill is passed into law. One of the challenges this has brought to the business arena is whether or not to adopt the new tax rates or to use the old rates given that the Bill has not yet been passed into law. The ZIMRA recently published Public Notice 52 advising taxpayers to adopt the tax tables provided for in terms of the Finance Bill.
The Finance Bill, 2020 proposes to raise tax free threshold to ZWL$5,000 p.m and top rate of 40% for amounts exceeding ZWL$100,000 per month. It also proposes two assessment years 1 January 2020 to 31 July 2020 and 1 August 2020 to 31 December 2020. The implication is that for 2020 two ITF16s will be filed. Although the ZIMRA has announced so, legally speaking the Finance Bill is not yet law and neither is Public Notice by the ZIMRA. The law-making process is provided for in terms of s131 of the Constitution of Zimbabwe and legislative provisions only come into force upon being gazetted. There are, however, practical considerations involved in the ZIMRA’s stance of adopting the rates as provided for in terms of the Finance Bill. For Instance, the PAYE tax tables are for the benefit of the taxpayer.
Adoption of the new employment tax tables for the month of August to December as published by ZIMRA automatically entails acceptance of two tax years of assessment for 2020. Then ITF 16 which was due for submission on the 31st of August must have been submitted taking into account the two years of assessment provided in the Finance Bill still to be gazetted. It is trite at law that one may not approbate and reprobate. Once an acquiescence is made to the status quo, either expressly, or by some unequivocal act wholly inconsistent with an intention to contest it, one cannot change his position when it suits them. It is a principle known as peremption which is aptly described by Mullins J in National Union of Metalworkers of SA and Others v Fast Freeze held inter alia that: “Peremption is an example of the well-known principle that one may not approbate and reprobate, or, to use colloquial expressions, blow hot or cold, or have one’s cake and eat it. Peremption also includes elements of the principles of waiver and estoppel.” This entails that taxpayers are bound by the tax tables and regulations attached thereto they used in filing the August return. However, one may argue that the contra fiscum rule may potentially be adopted in order to interpret the law in favour of the taxpayer. The legislature is burdened with the responsibility to make laws and taxpayers must not be punished for the legislature’s drag in providing the laws. On this basis a taxpayer cannot be penalised if they do not adopt provisions which are not in their best interests.
There are, however, likely to be penal measures attached to using the old tax tables, despite not having been outlawed by a gazzetted law. Taxpayers face the risk of being penalised should they rely on using the tax tables arguing legality thereof. The adoption of the tax tables entails an automatic adoption of associated provisions. It bars the taxpayer from denying the application of the other provisions on submission of ITF 16. The drawback however is that it may cause unnecessary legal debate which may result in the taxpayer ultimately losing in terms of penalties and interest given the time frame it takes to resolve a tax dispute. Nonetheless we foresee a situation in which the laws will be backdated to the 1st of August which are the intended dates for these laws to come into effect. Accordingly, despite not yet being passed into, taxpayers are better of abiding the ZIMRA Public Notice in order to avoid disputes in future.