The Impact of Zimbabwe?s Recently Implemented Vat Withholding Tax System on Tax Compliance and Tax Evasion: Desktop study

Gamuchirai K Mashingaidz, Newman Wadesango and Lovemore Sitsha
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Gamuchirai K Mashingaidz: University of Limpopo, South Africa
Newman Wadesango: University of Limpopo, South Africa
Lovemore Sitsha: Midlands State University, Zimbabwe

Journal of Economic and Social Development, 2024, vol. 11, issue 02, 01-13

Abstract: This article evaluates the impact of Zimbabwe's recently implemented Value Added Tax (VAT) withholding tax system on tax compliance and tax evasion to determine if it is an effective tool for curbing tax evasion and improving tax compliance. As Scholars have, however, questioned whether Zimbabwe's VAT withholding tax system is functional and whether it can help the country's income crisis as there is lack of empirical evidence to demonstrate how the system has affected tax authority, business operations and taxpayers' attitudes toward tax compliance in Zimbabwe. The study was conducted using desktop review. The findings indicate that the VAT withholding tax system has had a positive impact on tax compliance, as taxpayers are more likely to comply with their tax obligations when the tax is withheld at source. However, the system has also created opportunities for tax evasion, as some taxpayers have found ways to manipulate the system to their advantage. The study also highlights some of the challenges associated with the implementation of the VAT withholding tax system, including inadequate training and awareness among taxpayers and ZIMRA officials, as well as the need for better coordination and communication between stakeholders. Based on the findings, the study recommends that ZIMRA should strengthen its enforcement mechanisms and increase awareness among taxpayers to ensure that the benefits of the VAT withholding tax system are maximized while minimizing the risks of tax evasion.

Keywords: Vat Withholding Tax System; Tax Compliance; Tax Evasion; Zimbabwe (search for similar items in EconPapers)
JEL-codes: A11 (search for similar items in EconPapers)
Date: 2024
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