Fiscalisation is a crucial economic policy reform that has been implemented in Zimbabwe to enhance tax compliance and boost revenue collection. This article aims to provide a comprehensive overview of fiscalisation, its objectives, benefits, and challenges, as well as its impact on the Zimbabwean economy.
Fiscalisation is the requirement to use electronic fiscal devices, such as electronic tax registers and point-of-sale systems, to record and communicate sales data directly to the Zimbabwe Revenue Authority (ZIMRA). Its major goal is to reduce tax evasion by assuring accurate recording and reporting of sales transactions, boosting tax compliance and revenue collection. This is accomplished through fiscal devices, which are electronic devices with “fiscal memory.” A “fiscal memory” is a type of read-only memory that is permanently integrated into a fiscalised equipment to save tax information at the point of sale. There are three broad categories of the prescribed fiscalised devices namely, fiscalised electronic registers, also referred to as electronic tax registers (ETRs); fiscalised printers; and electronic signature devices (ESDs). Every VAT registered operator, whether in retail or not, must have a fiscalised device to record its day-to-day transactions. It must use a fiscalised electronic register or a non-fiscalised electronic register in conjunction with a fiscal memory device to record their business transactions. All other operators who must use such devices but are not retail operators must use an electronic signature device, a fiscalised electronic register, or a non-fiscalised electronic register in conjunction with a fiscal memory device.
The registered operators have certain requirements spelt out in the statutes that must be followed when one has a fiscal device. However, the Authority has noted that some registered operators are not complying to the requirements. In terms of the law, VAT registered operators are required to use the device on a daily basis and for every transaction; prepare daily, monthly and annual reports (z-reports), which outline: the date of the report and period it applies; the name and address of the registered operator; the VAT identification number and Business Partner Number of the registered operator; the unique identification number (Serial number) of every fiscalised electronic register, fiscal memory device and electronic signature device used by the registered operator; the total value of sales in respect of the period covered by the report; and the total amount of tax paid in respect of the period covered by the report. All currencies of trade should be shown on the report. Users of fiscal devices should ensure that the device is correctly configured, particularly with regard to the description of goods/services and the correct allocation of their respective tax rates, keep the above-mentioned reports for a period of six years, and make such reports available to ZIMRA whenever required.
Fiscalisation has a number of advantages for both the government and enterprises. To begin with, it improves openness and accountability in the tax system, eliminating potential for tax evasion and corruption. By digitalising financial transactions, tax authorities can better track and monitor business activities, decreasing potential for tax evasion. This increases revenue, which can then be used for development initiatives and public services. It also increases efficiency and encourages simplicity because, electronic records reduce paperwork, making tax returns and audits easier and faster to file. Businesses save time and resources as a result, allowing them to focus on their core operations. The possibility of errors in tax calculations is reduced improving tax assessment accuracy.
The introduction of fiscalisation has been a significant milestone in tax administration. However, this transition has not been without its challenges for taxpayers. The implementation has increased the complexity of tax compliance for businesses and individuals alike. Taxpayers now need to adopt new technologies, such as electronic fiscal devices, and ensure their proper integration with their existing accounting systems. This requires significant investment in terms of time, resources, and technical expertise. Moreover, taxpayers must navigate through complex regulations and guidelines associated with fiscalisation, making it difficult to understand the requirements and comply accurately. This complexity often leads to errors and non-compliance, which can result in penalties and legal consequences.
ZIMRA continues to encourage taxpayers to adhere to fiscalisation rules and policies as it leads to more good than harm. Meanwhile registered operators can claim 50% of the cost of acquisition of the fiscal electronic registers as Input Tax on their VAT 7 Return; the remaining 50% is spread over two years as and claimed as Special Initial Allowance “SIA” on the Income Tax Return (ITF 12C); rebate of duty is granted to Approved Suppliers on the importation of fiscal devices and fiscal memory devices; no VAT is payable on the importation of fiscal devices by approved suppliers and local supply of fiscal devices and fiscal memory devices is also allowed.
The programme has had a noticeable impact on government revenue in Zimbabwe. It has played a crucial role in enhancing tax compliance in Zimbabwe. By requiring businesses to use EFDs, the government can track and monitor transactions more effectively, reducing the opportunity for tax evasion and increasing revenue collection. The digital recording of sales transactions also provides a transparent trail for auditing purposes, discouraging businesses from underreporting their income. As a result, fiscalisation has contributed to a more equitable tax system and increased overall tax compliance rates. Taxpayers are encouraged to keep on adhering to this good cause so as to boost the economy fully and also avoid unfavourable repercussions and penalties from ZIMRA.