Tax professionals have long been a crucial aspect of every country fiscal regulation and compliance. The role of tax professionals cannot be undermined, they are an important cog in the tax ecosystem. For the proper functioning of a tax system taxpayers need to be advised and because of the complexity and intricacies of the tax law it is certainly difficult for taxpayers to discharge tax obligations on their own. Besides this, the tax offices open doors to taxpayers who are illiterate, low-income, or elderly and these need to be assisted. The balance must however be struck between having people who should be allowed to assist as agents and their profession standing because the danger of not regulating is that those mandated with the roles of agents may inflict more harm to the society than good due to self-interest. Thus, an important function of the regulation of tax advisors is to help strike an appropriate balance between loyalty to the system and loyalty to the client. It ensures that taxpayers and the revenue authorities are protected from unscrupulous members of the society who may masquerade as professional experts, yet they lack they the necessary qualification or professional standing.
To this end, the recent gazettion by the government of the law which will regulate the taxpayers’ agents is a huge milestone in the development of our tax system. For many years, tax agents have been a mix of individuals from registered professional bodies such as lawyers, accountants, and economists with a significant number of them being nonregulated individuals who were not governed by any institutional regulations or oversight. Because of the lack of regulation, an environment of unskilled and unqualified persons attracted poor-quality advice with no repercussion. With the coming of the new law which requires tax agents to meet stricter requirements hence attracting higher standards when providing services to clients, there is hope but not guarantee that bad apples will be unearthed within our tax system. Why we speak of hope is because regulation on its own without necessary surveillance and strict examination does not guarantee good ethical conduct or tax morality, otherwise the tax practice will remain a market of lemons where one can enter and exit at will even with a high school certificate. The Public Accountants Auditors Body (PAAB), the Revenue Authorities and the examination bodies have therefore roles to play.
In terms of the law, all tax agents are required to register with the Commissioner General of the Zimbabwe Revenue Authority as the licensing authority. To be registered, an individual must belong to or be subject to the jurisdiction of a professional body, and have completed a course in basic bookkeeping principles, or have one year of relevant experience in the field of accountancy or taxation and have no record of criminal convictions in any court of law. In the case of a company or partnership or trust; a certified copy of its constitutive documents should be produced; all executive directors and partners, managers and employees who will be authorised to act on behalf of the tax agent must be registered as a tax agent. The Zimbabwe Revenue Authority will handle the registration process through the Commissioner or his designee. The registration process must be initiated by submitting Form DTF 190 to any Zimbabwe Revenue Authority office. ZIMRA will react to the application within 30 days, either approving and advancing with licensing or denying it and explaining giving reasons why. If a person is dissatisfied with ZIMRA’s decision, he or she may file an appeal under Section 10 of the Revenue Authority Act. If a practicing certificate is obtained, it is valid for two years and must be renewed 30 days before it expires. During practice, if a person violates the law or the laws of practice, such as engaging in fraud or theft, among other things, the license can be revoked or cancelled. ZIMRA has been given the authority to operate as the general institution in charge of agents in Zimbabwe. The Act was declared in effect 13 (thirteen) days after publication, making an effective date of July 20, 2023.
Many regards being recognized by the state as a regulated profession as the dividing line between being a self-declared career and a ‘real’ profession. Tax agents serve an essential public interest by advising taxpayers on how to comply with their legal duties; representing the tax affairs and determining the tax obligations, the state has an interest in cultivating and safeguarding this position. Tax consultants, on the other hand, vary from tax officials in that their primary devotion is to their customer. One key function of tax a regulation is to assist in striking an appropriate balance between loyalty to the system and loyalty to the customer.
Regulation also aims to protect clients from unethical or inept tax agents. The state’s regulatory involvement in this area is comparable to that in other areas of consumer protection. Governments regulate a significant amount of business activity to ensure that the public interest is served. Transactions between experts and consumers are one example. Consumer protection can be conceived of as professional regulation.
As much as regulating is a brilliant idea there are some critical issues that have to be addressed for example supply vs demand. The supply of potential professionals is unavoidably reduced when a profession is regulated by entrance requirements. A general equilibrium between supply and demand should always be maintained whenever a service sector is regulated. Therefore, it is crucial to determine in advance how many persons can be admitted to the profession immediately or within a short period of time given the laws envisioned in any proposal to regulate a professional service like tax advice. The value of the supply of tax consultants will be largely based on the experience and education requirements set forth in the legislation. The equilibrium between supply and demand for tax services could be significantly impacted by flexible transitional solutions.
On the demand side, an analysis of what types of professions will be required by what types of taxpayers should be conducted. For example, there is a significant difference in qualification requirements between a tax lawyer capable of handling complex cases in court and a person capable of preparing simple returns for small rural businesses. The demand for tax consultants will be determined by factors such as the development of the economy and the legal system, as well as the requirements imposed on taxpayers (how many people are required to submit returns). On the supply side, the availability of appropriate training is expected to be done thoroughly as this might be a stabling block.
In summation, the new regulation serves to help improve service quality across the entire sector while promoting professionalism among its members thereby helping build trust between taxpayers, tax advisors & authorities thus improving compliance rate significantly over time.