Interpretation of Fiscal Statutes

Zimbabwe has gone through different phases of transition in terms of monetary and fiscal policies.  The present multi-currency system that prevails at the moment has its origins dating back to 2009.With time we saw SI 142 of 2019 which detected that the USD was pegged at 1:1 with the ZWL coming into play and a lot of people in the labour market were found on the wrong side of the law, some due to failure to interpret the law accordingly and others ignorance. The payment of renumeration in United States Dollars attracts payment of taxes in the same currency however, a number of taxpayers did not understand this directive as they persisted to try and pay their taxes to ZIMRA using ZWL on the basis that it is one to one.

One would concur with the assertion that with the amendments of our fiscal laws time and again in Zimbabwe, the financial updates through regulations by the Minister of Finance and Economic Developments and press statements, there is need for every taxpayer to be equipped with law interpretation and understand the legislator’s intention so that one is not found on the wrong side of the law.

Tax legislation is an important source of law in issues affecting taxpayers; hence, every court dealing with a tax matter spends the majority of its time applying legislative provisions to the situations before it. However, before a court can do so, it must first determine the interpretation of the relevant statutory provision. A court must apply statutory interpretation rules in order to determine the meaning of a specific legislative provision. Statutory interpretation rules are methodologies used to establish the meaning of legislative provisions. The goal of these methodologies and principles is to aid courts in determining the meaning of a specific piece of legislative provision, often known as the “intention of the legislature. The article at hand seeks to offer readers a summary of how definitions are derived for fiscal laws.

In Zimbabwe interpretation of law is guided by the Interpretation Act (Chapter 1:01). This piece of legislation provides meanings and definitions which must be utilized when interpreting any item of law unless another meaning is specifically stated or implied in that legislation. For example, the Interpretation Act states that the term ‘month’ refers to a calendar month. Thus, if a statute requires that legal action be brought within seven months, that implies within seven calendar months of the end of the month in which the right to file the action originated. Tax legislations e.g., the Value Added Tax (Vat) Act and the Income Tax Act (ITA) usually give definitions as to the meaning of certain specific words to be used in their application. These contain a section, section 2, which has definitions of terms.

However, the same word or provision may also be defined elsewhere in the statute, for instance, in the ITA, definitions can also be found at the beginning of each of the Schedules of the Act. Definitions given in the Act are critical where one seeks to interpret certain words used in the Act. It should be emphasized, however, that a statutory definition does not always apply in all circumstances where the specified word or words appear in the Act. If a defined term or expression is employed in a context where the specific definition is inapplicable or absurd, it should be interpreted according to its ordinary meaning.

The general approach to statutory interpretation also applies to fiscal statutes. Steyn J, the then president of the Orange Free State Special Court (Income Tax Appeal), stated in ITC 1384 (1983) 43 SATC 95 that “fiscal statutes are not a privileged category of legislation and must be approached and dealt with in the same manner as other statutes. “The most important rule of statutory interpretation is that terms in a statute must be given their usual and natural meaning. Lord Cairn also alleged the same approach in the case of Partington v Attorney General 21 LT 370 at 375.The same was buttressed in the case of Sunfresh (Private) Limited t/a Bulembi Safaris v Zimbabwe Revenue Authority HB 78-04 where the court used  literal approach to explain the words “fees” and “payer”. Taxpayers when using the literal or ordinary approach, should also take cognisance of the use of the words “must”, “might”, “shall”, “will”, “have to” the list goes on, such words’ ordinary meaning gives a clue to assess whether something is mandatory or not.

Important rules in Statutory Interpretation

Rules of interpretation, often known as Canons of Interpretation, are guiding sticks used by courts to determine the intent of the law maker, or at the very least the meaning of terms employed in a statute. To realize how fiscal law is interpreted by the courts, it is necessary to understand the application of the basic meaning and application of the canons of interpretation. These include;  the ordinary/ Grammatical Meaning Rule, the Golden Rule, Ejusdem generisExpressio unius est exclusio alteriusIn pari materia , Rule against surplusage, contemporanea exposition,Noscitur a sociis, the Contra fiscum rule and Preremptory and Directory provisions the list is not exhaustive it goes on.

In summation, when faced with a case in hand that involves the law and interpretation which a company is failing to locate or agree to, it is wise to approach tax advisory firms for an opinion or recruit a legal expert in the company that will be responsible for that area. With fiscal law amendments and change seen in Zimbabwe time and again, it is of paramount importance to interpret the law accordingly so as to stay consistent with the lawmaker’s intention.

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