Tax evasion and its setbacks
Tax evasion is unlawful attempt to minimize tax liability through fraudulent techniques to circumvent or frustrate tax laws, such as deliberate under-statement of taxable income or willful non-payment of due taxes
Tax evasion is a very serious crime. The law does not even spare celebrities. People like former Fugees singer and eight-time Grammy Award winner Lauryn Hill served three months in jail for failing to pay taxes on her income between 2005 and 2007. Ja Rule served 28 months in prison. Others have faced heavy fines. If one does not have a tax clearance certificate, any registered customer they supply will be obliged to deduct 10% percent of the invoice value when paying them. In most instances, this will significantly reduce profit margins. The best thing to do in order to survive and grow in this environment is to be tax compliant. Businesses are encouraged to talk to a professional Tax Accountant for advice.
Tax compliance is required if you want to obtain a vendor number and State Procurement Board registration. Businesses therefore miss out on supplying the lucrative public sector, which is the biggest segment of customers in any economy. Many small enterprises have shot to great fortune after winning big tenders from state institutions. For SMEs, being tax compliant is indispensable if one wants to grow the business. For starters, one cannot get funding from formal financial institutions without tax compliance. Apart from asking for a tax clearance certificate, lenders will also ask for the same financial statements that Zimra requires enterprises to keep.