Zimra cuts Kereke's RMC tax liability to $1,7m

Published: 04 March 2014

The Zimbabwe Revenue Authority (Zimra) has cut down RMC Hospital's tax bill from a whooping $4 million to $1,7m, in a development that should give some reprieve to Munyaradzi Kereke, the RMC owner.

Last week, the Bikita West legislator appealed to the Supreme Court through his company FairDrop Trading Pvt Ltd against a High Court order demanding RMC hospital to pay Zimra close to $4m in taxes for the last three years.

The case is yet to be heard at the Supreme Court.

In his appeal, Kereke said High Court judge, Justice Joseph Mafurise had erred in dismissing his application to stop Zimra from garnishing RMC account to collect the tax liability. The garnishee orders have since been amended to reflect the real outstanding balance.

In a letter addressed to Kereke dated February 28, Commissioner Investigation and International Affairs Anna Mutombodzi said deposits previously wrongly treated as income of $731 000 for 2010 had been reduced to $523 000 after eliminating loan drawdown, interest income reversal and reversal of facility fees.

Over $1,1m that was previously subjected to tax during 2012 was also excluded following submissions by Kereke's Fairdrop Trading broken down as shareholders contribution.

"Please note that $1,112, 323.00 consisted of $539,109.38 which is the value of the house that belongs to Munyaradzi Kereke and not Fairdrop Trading and $573 213.62 in monetary injection, $513,273.62 was already taxed in the assessment for the tax year ended 31 December 2010," said Mutombodzi.

Other areas where Zimra made concessions include reversals in taxes that had been lumped on Kereke's Mt Pleasant house which he had invested into the Hospital project, income of doctors which had wrongly been taxed, bank loans which Zimra had taken as taxable revenue to the hospital, construction improvements and marketing expenses which had been disqualified.

Zimra, however, remained circumspect over an increase in an amount which Kereke termed "shareholder's contribution" in the company balance sheet of $422,878,00 as taxable income in the hands of Fairdrop Trading as there was no acceptable evidence to show the funds were the shareholder's contribution to Fairdrop.

The revenue collector had thus asked for paper trail to support this claim. Kereke maintained in his court papers that the investment must not be taxed given that the RBZ had already taxed him on paying his exit package from the Central Bank.

Asked for comment, one of Kereke's lawyers who declined to divulge details citing sub judice, said: "We are very happy Zimra have realised part of their mistakes and self-corrected. If our clients was a straw with no means for fight for justice at the courts he would have been made to pay $4m. We leave the rest to the Supreme Court as per our client's appeal against the alleged taxes."
- zimmail

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