×
NewsDay

AMH is an independent media house free from political ties or outside influence. We have four newspapers: The Zimbabwe Independent, a business weekly published every Friday, The Standard, a weekly published every Sunday, and Southern and NewsDay, our daily newspapers. Each has an online edition.

Imported car smugglers bleed Treasury

News
By Henry Mhara The shiny limousines and ramshackle taxis that share Zimbabwe’s roads have one thing in common — both sets are among thousands of vehicles that are smuggled into the country annually, prejudicing the national Treasury millions of dollars in taxes.

By Henry Mhara

The shiny limousines and ramshackle taxis that share Zimbabwe’s roads have one thing in common — both sets are among thousands of vehicles that are smuggled into the country annually, prejudicing the national Treasury millions of dollars in taxes.

With the local car assembly industry hardly operating, Zimbabweans have been forced to import cars and figures from the government statistics office ZimStats show that more than US$5 billion has been spent on vehicle imports since 2009.

But some of the cars are brought into the southern African nation illegally by corrupt importers who undervalue their cars in connivance with clearing agents, law enforcement agents and government officials, according to recent court records.

An expert in the sector says Zimbabwe is losing about US$5 million every year to smuggling, under-invoicing of car imports, money which could be used to procure national essentials such as drugs.

“We are struggling economically and in these desperate times, we could be using this money for COVID-19,” said the official from the Zimbabwe Revenue Authority (Zimra), who declined to be named.

Zimbabwe is battling to finance its already ailing health sector to deal with coronavirus as local cases continue to rise.

In a letter to the World Bank, International Monetary Fund and the African Development Bank, Finance minister Mthuli Ncube in June this year said Zimbabwe needed at least US$200 million to fight the pandemic.

Official statistics show that on average 4 000 new and pre-owned vehicles imported from countries such as Japan, Britain and South Africa are cleared through Beitbridge Border Post every month with Zimra collecting at least US$8,5 million in taxes.

Zimra is currently charging up to 96% duty for used car imports, so on average a modest vehicle attracts import duty of between $2 500 and $5 000.

Beitbridge, on Zimbabwe’s border with South Africa, is southern Africa’s biggest inland port.

While Zimra officials have not been available to discuss details of vehicle smuggling, one major indicator of the problem are some recent high-profile court cases involving a top government official and a businessman.

Former principal director for State Residences in the Office of the President and Cabinet, Douglas Tapfuma, was jailed for four years in June after being convicted on three counts of criminal abuse of office by fraudulently importing eight vehicles duty-free.

Businessman Genius “Ginimbi” Kadungure, who has a collection of top of the range sports cars, was recently convicted of under-declaring the price of his Bentley Continental GT bought from South Africa last year and of paying US$81 000 in import duty instead of nearly $140 000.

This scam was a classic case of trade misinvoicing, which is responsible for a substantial proportion of illicit financial flows around the world.

According to US-based Global Financial Integrity (GFI), trade misinvoicing cost Zimbabwe US$1 billion over a 10-year period, indicating the lack of adequate detecting systems in the country’s trade systems.

GFI senior economist Rick Rowden in June this year told NewZimbabwe.com website that, “For Zimbabwe’s trade with all of its global trading partners in US dollar terms we identified gaps totalling US$694 million for the year of 2017 and an average sum of nearly US$1 billion over the 10-year period of 2008-2017.”

GFI says that trade misinvoicing accounts for around 87% of the estimated $70 billion that Africa loses annually through illicit financial flows.

Last November, Zimra seized 433 cars that had been imported into Zimbabwe without paying customs and excise duty. At least 74 Zimra officials were arrested and a dozen others dismissed.

Zimra did not give details on how the vehicles managed to get into the country without paying tax, but a source at the organisation said there’s a criminal syndicate behind the scams:

“It’s a syndicate involving the importer, the clearing agents, the tax authority’s employees and car dealers who manipulate the customs clearance procedures.”

An official with one of the leading Japanese used car exporting companies to Zimbabwe said: “Eighty percent of people who buy cars from us request that we undervalue their invoices for duty purposes. We don’t have a problem doing that for them as long as we get our payment. That is one of the reasons that we have many Zimbabweans buying from us.”

The official, who declined to be named, said they export at least 3 000 second-hand vehicles to Harare every month, while a clearing agent at Beitbridge said they connive with Zimra officials to create fictitious customs clearing certificates which they use to release and register vehicles as duly imported.

After releasing the vehicles, the syndicate shares the loot from the unpaid duty, according to the agent.

The revenue that Zimbabwe is losing could be going into plugging its acute shortages of fuel and medicines.

Zimbabwe Anti-corruption Commission spokesperson John Makamure confirmed that they had helped Zimra seize some vehicles that were smuggled into the country without paying import duty.

“We do joint operations with Zimra and our duty is to investigate that a person might not have paid duty and we seize the assets,” he said.