Anti-Money Laundering

Anti-money laundering (AML) refers to the laws, regulations and procedures intended to prevent criminals from disguising illegally obtained funds as legitimate income.

The AML framework in Zimbabwe is established through the Money Laundering and Proceeds of Crime Act -Chapter 9:24; (MLPCA), which is an act to suppress the abuse of the financial system and enable the unlawful proceeds of all serious crime and terrorist acts to be identified, traced, frozen, seized and eventually confiscated. ZIMRA has a section dealing with anti-money laundering in partnership with the Financial Intelligence Unit from Reserve Bank of Zimbabwe (RBZ)

Though anti-money laundering laws cover a limited range of transactions and criminal behavior, their implications are far-reaching. For example, AML regulations require banks and other financial institutions that issue credit or accept customer deposits to follow rules that ensure they are not aiding money-laundering.

Why Anti-money laundering (AML)

• Anti-Money Laundering (AML) seeks to deter criminals by making it harder for them to hide ill-gotten money.
• Criminals use money laundering to conceal their crimes and the money derived from them.
• AML regulations require financial institutions to monitor customers' transactions and report on suspicious financial activity.

Reporting Suspicious Activity.

Report Money Laundering activities to ZIMRA on the following email address:

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Advance rulings are a trade facilitation tool and Section 34D of the Revenue Authority Act [Chapter 23.11} provides for the issuance of advance tax rulings. Section 87 of the Customs and Excise Act provides for classification of goods for customs purposes.

Advance tariff classification rulings, can be requested by importers and other relevant parties regarding their advance importation. This request is done through an application in writing to the Commissioner Customs and Excise.

Requirements

1. Applicant to complete a Request for Classification Decision Form (RCD)

• Applicant (Name & Address)
• Description of goods (composition, intended use)
• Classification envisaged by applicant
• Basis for envisaged classification

1. Samples, photographs, plans, catalogues or other documents, if necessary
2. State whether the goods are the subject of verification process, or any appeal

The advance ruling is issued in writing and binding to ZIMRA. The ruling is applied only with respect to goods described, and the ruling will not be honored if the good differs from that described in the ruling; if applicable laws and regulations are amended after the issuance of the ruling; or if there is an error in application of laws and regulations. The ruling may be cancelled if it was given on the basis of incorrect or incomplete details provided by the applicant.

Benefits of Advance Rulings

• efficient revenue collection through uniform application of the Harmonized System
• Proven trade facilitation tool that harmonise and expedite clearance processes.
• promote consistency, certainty, predictability as traders can plan adequately for their  importations thus enabling the business to make informed decisions

The issuance of an advance ruling may be declined or postponed where:

• The applicant fails to provide additional information required;
• A good is the subject of a classification process, or any instance of review of appeal

Importers and the like may also make an inquiry orally (by phone or at a customs office counter) or by emails. However, please be guided that any response to such oral/email inquiry is given only for the reference purpose for traders.

Download RCD Form tarriff classification 

Initiation of Criminal Investigations

Taxpayers are required to meet their tax obligations as prescribed by Law.  Where they fail to do so, ZIMRA has the powers to address that failure using a range of compliance improvement measures including prosecution. Apart from penalty for various defaults, the Income-tax Act also contains provisions for launching prosecution proceedings against the taxpayers for various offences. The Revenue Assurance Investigation Division carries out criminal investigations regarding alleged violations of the tax and customs laws.

Sources of Criminal Investigations for ZIMRA

When tax auditors in ZIMRA detect possible misdemeanours regarding tax and/or Customs issues from the information they have, the Authority initiates investigations. Information can be obtained from investigations that will be underway already or it can be received from the public or other sources. 

Preliminary Analysis and Investigation Approvals

A preliminary analysis is conducted on a possible criminal case and relevant approval is sought prior to the case being taken up as a criminal investigation. 

Conducting a Criminal Investigation

Upon the opening of an investigation, the case officer gathers the facts and evidence needed to establish the elements of criminal activity. The case officer conducts interviews of third party witnesses, carries out surveillance, reviews financial data and other related information.

The case officer works closely with the Zimbabwe Republic Police and National Prosecuting Authority during the criminal investigation process. 

Prosecution 

When the case officer files papers for prosecution, they will work with the prosecutor to prepare for trial. The case officer can be called as state witness to testify at the trial and support the state`s case against the alleged offender.

Conviction

The desirable result of a Criminal Investigation prosecution recommendation is to get a conviction – through either by a guilty verdict or plea. The prosecuting and arraignment of offenders is meant to deter would be tax offenders, increase voluntary compliance and revenue flows and nip tax fraud in the bud.

Withholding of Value Added Tax was introduced with effect from 1 January 2017 and some registered operators have since being appointed as VAT Withholding Tax agents. The VAT Witholding Tax agents’ role is to withhold a portion of the VAT when paying their suppliers who are registered for VAT.

What is Value Added Withholding Tax?

It is a tax withheld by appointed agents when they pay their suppliers for the acquisition of taxable goods and services. A list of appointed agents is available on the ZIMRA website.

From whom should the tax be withheld?

VAT withholding agents should withhold from their suppliers who are registered for VAT. VAT withholding tax shall be withheld on payments of standard rated supplies. No VAT shall be withheld on payment for the supply of exempt and zero-rated supplies.

What is the rate of Value Added Withholding tax?

The rate of Value Added withholding tax shall be 1/3 of the output tax (VAT charged). In cases where payment of the supply is made in instalments, VAT shall be withheld on the output tax on each instalment

What is the supplier supposed to do?

The supplier must:

• Receive a VAT withholding tax certificate from the agent.
• Claim the VAT withheld as a credit on submission of VAT returns.
• Attach a schedule of amounts withheld by various agents to the VAT return.
• Keep the tax certificates obtained from withholding agents for a period of six years

NB: The VAT withholding tax deducted will reduce the amount of VAT payable during the tax period or increase the refundable amount.

Should a supplier supply less goods and or services because VAT has been withheld?

The amount withheld is VAT and it is remitted to Zimra by the agent. The supplier claims the tax as a credit on the VAT return which means the tax is an advance payment. Therefore the suppliers is not supposed to supply less goods or services following the withholding of the tax.