Safe boxes were traditionally used to secure valuable items such as money, jewellery, and documents from theft, fire, or other threats. However, there are widespread beliefs among many governments, that safe boxes have become safe havens themselves and that their use has expanded to include use in hiding proceeds from crime and money laundering, and for use in facilitating tax evasion. In Zimbabwe, the use of multicurrency, particularly the United States Dollar cash is believed to undermine the banking of proceeds from trade and investment and also pose a threat to tax revenues collection and safe boxes are believed to be facilitating these. To address this, the government through Finance Act 13 of 2023 enacted new laws to address these problems to ensure transparency and fair tax declaration. This article explores the specifics of the amendment, the relevant laws, and their implications for businesses and the economy.

Section 53 of Cap. 23:06 of the Income Tax Act outlines the responsibilities of representative taxpayers, including agents, trustees, and company representatives who handle tax matters on behalf of other taxpayers. The section was amended to introduce specific definitions for various representative taxpayers, such as “professional custodian,” which now explicitly includes financial institutions and designated business services managing assets on behalf of clients. Additionally, “digital asset” is defined as any identifiable and tradeable asset created and stored digitally. These clarifications delineate who is responsible for tax obligations, ensuring proper tax compliance and further place those providing custodial services as part of the persons responsible for the administration of tax laws on behalf of the ZIMRA.

Another change is the revision of s 60 of the Income Tax Act (Chapter 23:06) and the introduction of a new provision, s60A in the same Act. Section 60A empowers the ZIMRA Commissioner General to apply for a special warrant from a court to access the contents of safe deposit boxes if he believes a tax debtor possesses or has title to assets held by a professional custodian. An application for a special warrant must include the name of the tax debtor who is the subject of the warrant, together with his or her address, contact details, and the assessed extent of his or her tax liability. The special warrant must also be supported by an affidavit sworn by or on behalf of the Commissioner-General affirming that, from the information available to him or her, he or she has reasonable grounds of suspicion against the tax debtor for having committed certain offences described in the Income Tax Act. Using the special warrant, the commissioner can request the tax debtor to open his/her safe deposit box, provide any electronic or other key for opening the safe deposit box, examine and inquire into the affairs of any tax debtor, require any person who is employed in or at the premises of the tax debtor to produce any book, account, notice, record, list or other documents relating to the affairs of the tax debtor. to examine and make copies of any book, account, notice, record, list or other document relating to the affairs of a tax debtor; to take possession of any book, account, notice, record, list or other document relating to the affairs of the tax debtor, to take possession of the contents of any safe deposit box, then issue a full written receipt to the owner of the safe deposit box or the institution having custody of the safe deposit box, of the contents taken, including the description of the nature of the contents, the quantity and, if ascertainable, the value of the contents, as well as any identification numbers or marks on the contents. In the execution of a special warrant, the Commissioner General should notify the police officer commander of the area where he/she earmarked the search, entry or seizure and be accompanied by a police officer. Meanwhile, ZIMRA, the Prosecutor General, and the liable tax debtor may enter into a written agreement called a “non-prosecution agreement for purposes of exempting the debtor criminal proceedings provided he declared the shortfall taxes. A failure by a debtor to comply with the special warrant is a punishable offence subject to a level 14 fine or 5 years imprisonment or both the fine and imprisonment

In summary, the new laws entail increased surveillance on the use of safe boxes to promote fair tax declarations. By providing clear definitions and responsibilities, the legislation ensures that all taxable assets are accounted for, promoting transparency and accountability in the tax system. This change is expected to benefit both the government and the business community by creating a more predictable and fair tax environment.