The Challenges Faced By Taxpayers

1026 WordsJan 7, 20175 Pages
MIDLANDS STATE UNIVERSITY NAME: RICHARD DANN ZULU STUDENT NUMBER: R 154659 V ACADEMIC FACULTY: FACULTY OF COMMERCE DEPARTMENT OF ACCOUNTING MODE OF ENTRY: VISITING PROJECT PROPOSAL A qualitative case study on the challenges faced by Taxpayers in using Electronic Fiscal Devises in calculating Value Added Tax in Zimbabwe. A Case study of some selected taxpayers in KweKwe. CHAPTER ONE INTRODUCTION 1.0 Background of Study Tax evasion and avoidance through the undervaluation of tax invoices especially by small to medium taxpayers, has been the major challenge in the administration of Value Added Tax (VAT) in Zimbabwe. Mhlanga…show more content…
The use of Electronic Fiscal Devices (EFD) can establish the amount of VAT payable without necessarily requiring the traders to provide recorders for crosschecking. A computerised tax audit trail is established and less disputes from taxpayers arise from the use of the EFD`s as there was great concern over undervaluation of sales in order to evade tax. The use of EFD`s has far reaching implications for taxpayers the cost of procuring EFD range from US $ 600 to US $ 3,200 per unit which would weigh down on small businesses. According to Musarurwa (2014), he believes that it is imperative for Zimbabwe which is grappling to tap into the informal sector, as most of the small to medium scale enterprises remain outside the tax bracket. 1.1 Background of Study The established system of using the EFD aims to allow a reduction in collection costs helps the taxpayer in complying with the VAT regulations and it provides correct and accurate sales information that hinders tax avoidance and evasion. The EFD is a machine designed for use in business for efficient management controls in areas of sales analysis and stock control system. According to Mlambo (2016), in the Zimbabwean context, ZIMRA has linked only 60% of the 10,000 EFD`s earmarked for connection to the servers by September 30, 2016.
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