Tax Matrix managing Director, Mr. Marvelous Tapera has said that Zimbabwe could be losing millions of dollars through tax leakages. He alleged that multinational companies are transferring their profits to other countries where tax rates are comparably lower.
Without disclosing statistics, Tapera said that Zimbabwe could be losing millions to transfer pricing. He said:
By transfer pricing we are talking about shifting profits from one company to the other and multinational corporations do that.
A research about the illicit financial movement was done in 2014 where it was established that the country could be losing millions per year to transfer pricing although I can’t give figures at this stage.
Mr. Tapera said that rules governing transfer pricing have not been implemented hence the continuation in tax leakage. He said:
Transfer pricing is very important. Rules were introduced in 2016 but the key thing is that they haven’t been effected as the legislature and tax fraternity are still trying to understand them.
Transfer pricing is all about benchmarking which should be enhanced by database.
Miss Heather Marwei, a Germany-based professional researcher in Transfer Pricing Documentation said that regulations in Zimbabwe could be contributing to investor flight. She noted that when the Zimbabwe Revenue Authority demands investors to deliver documents within seven days from request date by the commissioner, other economies like South Africa stretch the period to 21 days.