The legal framework governing tax enforcement in Zimbabwe is going through significant transformation with the enactment of clause 45 of the Finance Act No. 7 of 2024 which amends Section 34F of the Revenue Authority Act. This enactment introduces new enforcement powers for the Commissioner-General, a significant shift in the legal framework governing tax investigations and recovery. These amendments expand ZIMRA’s ability to seize assets where a taxpayer is classified as a “tax debtor.” This brings into focus the Commissioner’s search and seizure powers, legal standing and scope.
Case Background:
In PIL International (Pvt) Ltd v ZIMRA & Anor HH 213-17, the High Court examined whether the seizure of a company’s computer equipment by ZIMRA officials was lawful under section 61 of the VAT Act. The court held that while the Commissioner was empowered to access and seize documents and printouts for audit or investigation purposes, this authority did not extend to the physical seizure of computers or other information retrieval systems.
In Hillmax Engineering (Pvt) Ltd v ZIMRA HH 832-22, the High Court considered an urgent application following ZIMRA’s unannounced seizure of laptops and documents from the taxpayer’s premises without a warrant. The court held that while ZIMRA was authorised to seize documents and printouts under the Revenue Acts, this did not extend to physical seizure of laptops or computer systems. The seizure of the laptops was therefore unlawful and ZIMRA was ordered to return them within 24 hours. The seizure of documents and files was upheld as lawful.
Legal interpretation:
Clause 45 amends section 34F of the Revenue Authority Act and expands the Commissioner General’s enforcement powers to include the seizure of electronic devices, stock-in-trade and cash. Importantly, seizure powers are now extended to digital platforms with capacity to store, process and manage data, where officers may demand access, printouts or reproductions of data stored electronically. These powers are conditional upon written authorisation from the Commissioner-General, a warrant issued by a magistrate based on an affidavit showing reasonable grounds that a tax offence has been committed. The amended section now permits designated officers, upon securing a warrant authorised by a magistrate to: seize any USB or electronic storage devices found on the person or premises of a tax debtor; seize stock-in-trade of a tax debtor and where payment is not made within a reasonable time, dispose of such stock to recover tax debts and seize cash found at the premises to offset tax liabilities. A clear definition of a “tax debtor,” is limited to persons whose assessed liabilities remain unpaid and unchallenged or where objections have failed or lapsed. While the amendments expand enforcement powers, they must still operate within constitutional boundaries specifically, they cannot override the rights to privacy, property and due process under the Constitution.
Decision Impact:
The expanded Commissioner’s enforcement powers granted under Clause 45 materially alter the compliance environment and it widens the scope of recoverability and has immediate implications for taxpayers. While the provision is intended to respond to practical enforcement challenges, it introduces a potentially broad and subjective standard, “reasonable grounds”, which remains a legal prerequisite for warrant issuance and any exercise of the powers must conform to the procedural standards established in the Revenue Authority Act. While Clause 45 strengthens ZIMRA’s operational reach, it does not displace legal remedies. Where seizure powers are exercised in excess or without due process, taxpayers may seek judicial review.
While rooted in statutory authority, long-term clarity on the scope and limits of these powers will depend on how the ZIMRA interprets and applies the provision in enforcement practice and how the courts interpret and apply Clause 45 in future cases.