The value-added tax refund problems in developing countries – case of Zimbabwe

Refund abuse is especially problematic when implementing value-added tax (VAT). Nevertheless, refunds must be paid promptly to ensure that VAT does not become a cost to business. There is therefore a need to strike a balance between procedures put in place to limit refund fraud opportunities and not causing refund delays. It is against this background that the study sought to investigate the refund processing system in Zimbabwe to highlight potential challenges faced by taxpayers and tax administrators. Evidence was collected by reviewing domestic legislation and other published literature, analysing the administration processes, including administering taxpayers and tax administrators surveys. The study found weaknesses in tax design and administration processes that created opportunities for refund fraud, fraudsters and tax planners taking advantage of the weak structures, taxpayers who fear pursuing their rights (as that will trigger a comprehensive audit), and a general unwillingness of the tax administration to invoke existing tax laws.

Tax Policy and Inclusive Growth

This paper discusses the theory and practice of tax design to achieve an efficient and equitable outcome, i.e. in support of inclusive growth. It starts with a discussion of the key principles from tax theory to guide practical tax design. Then, it elaborates on more granular tax policy, discussing key choices in the structure of the personal income tax on labor and capital income, taxes on wealth, the corporate income tax, and consumption taxes. The paper concludes by highlighting the political economy considerations of the issues with concrete recommedtions as to how to implement tax reform.