Analysis of Corporate compliance to ZIMDEF Statutory Payments in Zimbabwe

Abstract

This study sought to analyse the corporate compliance to ZIMDEF statutory payments in Zimbabwe. ZIMDEF contributions are mandatory statutory payments by eligible employers based on cost of wage bill as defined by the Manpower Planning and Development Act Chapter 28:02 and the accompanying statutory instruments. The payment is based on 1% of the total wage bill inclusive of allowances, bonuses and benefits. In summary it looks at the total cost to the organization of employment. ZIMDEF contributions are payable by the 15th day of the subsequent month. Late payments will incur penalty interest of 10% of the total outstanding balance. In this study various stakeholders of Zimbabwe Manpower Development Fund were used that is Companies, ZIMDEF Employees and other stakeholders. The theoretical approaches of tax compliance have commonly been divided into economic deterrence theory and the wider behavioural theory (Frey & Feld, 2002). The behavioural theory encompassed the social and fiscal psychological theories. The use of deterrence theory model was mainly prevalent in the examination of tax evasion (Frey & Feld, 2002). The theory can be achieved through a number of approaches and these could be both punitive and persuasive. The researcher used questionnaires and interviews as research instruments. The study showed that the main causes of non-compliance to manpower training levy in Zimbabwe are the negative macroeconomic fundamentals, planned behaviour and poor compliance culture. The study revealed that Economic deterrents do influence the Training levy evasion behaviour. This study recommends that to reduce Manpower training levy evasion, ZIMDEF should engage defaulting employers to come up with workable payment plans. Incentives for compliance such as penalties amnesty can be put in place to improve on compliance. The respondents rated training levy contributions as very low and an increase in these can enforce a compliance culture. Recommendation was also given that further research be undertaken in order to assess the causes of training levy contribution evasion when the economic environment normalizes as this research was done when Zimbabwe was facing difficult macro-economic conditions even though the economy had adopted a multicurrency basket system to curb inflation.