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Zimbabwe’s Econet Beats $100 Million Tax Evasion Rap

Given the thuggish manner the Zimbabwean economy was being run back in 2013 – by thugs, obviously – it’s not a great surprise that Econet got hit with a $100 million and up claim for the underpayment of taxes. What’s good about this story is that justice will out and that they’ve beaten the entire claim.

For us there’s a certain importance in powers that have been given to HMRC. For, to example, be able to claim tax due before the courts have ruled upon whether it is actually due. Cough up then complain isn’t quite how justice should be done now, is it?

The initial claim:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] Yesterday, the Supreme Court dismissed claims by ZIMRA that Econet owed the national revenue authority $100 million that they hid from them through tax evasions. The dispute has been on-going for a number of years with a whistleblower claiming that Econet owed the taxman as much $300 million back in 2014. Edward Mutambanadzo- the whistleblower- who whipped up this storm also alleged that Econet overstated prices on imports from its Mauritius company among other illegal practices. [/perfectpullquote]

Well, yes, that whistleblower:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]The dismissed case started after a shipping agent who, following allegations of fraud, lost business from Econet. He then decided to turn a whistle-blower in what he alleged was fraudulent importation of several other items that include base station equipment.[/perfectpullquote]

Hardly a disinterested party there. But as a result the taxman impounded at least some of the tax they said was owed:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] “Zimra had garnished Econet’s bank accounts to the tune of $61 million in December 2013. There was a media frenzy with allegations that Econet had evaded duty and amounts of up to $300 million were mentioned,” Nyambirai said. “Rather than fight the allegations in the media, Econet applied to the High Court, which struck down $47 million of the amount claimed by Zimra.” [/perfectpullquote]

That was then appealed again and the total amount owing is $0.

Econet is a large business and had the capital to ride that confiscation. But imagine a business that didn’t? Vast sums are swallowed into the maw of the tax authority and then it takes years to get them disgorged again. It’s possible to bankrupt a business, perhaps somebody, just by making a claim that is. Which isn’t a power we should be giving to people, is it?

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