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Impact of value added tax refunds on revenue collection - a case of Region 1 taxpayers, Zimbabwe

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Listed:
  • Tapiwa Dalu
  • Ruvimbo Gillian Dalu
  • Tatenda Archibald Matibiri
  • Langton Madzamba

Abstract

The value added tax (VAT) refund claim process the 'Achilles heel' of VAT system. This paper seeks to examine the VAT refund approach of ZIMRA and tries to gauge the effectiveness of the approach and suggest a typical model of best practice that takes into consideration compliance issues faced mainly in developing and transitional countries during different stages of development of the VAT system. By administering an interview questionnaire to 150 respondents and obtaining data from various ZIMRA reports and statements and VAT legislation, the study finds out that most of the taxpayers or investors importing large items of capital equipment complained that the levying of VAT on their imports has a negative effect on their cash flow, lack of categorisation of clients into various classes for VAT refund process delayed refunds and the fact that the VAT registration threshold is way too low and thus tends to lead to registration of defaulters or fraudsters. The study therefore recommends more focus to be put on limiting pre-refund audits to high-risk cases, paying interest on refunds processed late and proper administration of statutes and education of clients on their rights and obligations with regards to the VAT system.

Suggested Citation

  • Tapiwa Dalu & Ruvimbo Gillian Dalu & Tatenda Archibald Matibiri & Langton Madzamba, 2016. "Impact of value added tax refunds on revenue collection - a case of Region 1 taxpayers, Zimbabwe," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 11(3), pages 247-273.
    • Handle: RePEc:ids:ijecbr:v:11:y:2016:i:3:p:247-273
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    References listed on IDEAS

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