Zimra surpasses gross revenue target ZIMRA offices

Mounting fiscal pressure has consequently put enormous pressure on the taxman to rise to the occasion through increased taxation

Walter Muchinguri Assistant Business Editor
The Zimbabwe Revenue Authority surpassed its gross revenue target by a marginal one percent after collecting $3,84 billion against a target of $3,82 billion. Net collections for the year, however, were $3,60 billion against a target of $3,82 billion, representing a negative variance of 6 percent.

According to the latest revenue performance report issued by Zimra, the fourth quarter net collections were 10 percent below the target after the authority collected $996,94 million against a target of $1,11 billion.

Zimra commissioner general Mr Gershem Pasi said revenues were suppressed by liquidity challenges, company closures and scaling down of operations.

“These factors, among other things, resulted in the revision of the expected Gross Domestic Product (GDP) growth downwards from 6,1 percent to 3,1 percent in the Mid-Term Fiscal Policy Review Statement. However, the overall revenue target for the year was maintained at $3,82 billion,” he said.

During the period under review individual tax, mining royalties and other taxes exceeded the target by 20 percent, 10 percent and 12 percent respectively.

Collection from individual tax or Pay As You Earn (PAYE), which contributed the most to total revenue collected at 26 percent, amounted to $911,8 million against a target of $760 million, representing a positive variance of 20 percent.

Mr Pasi attributed the performance of the revenue head to improved compliance as a result of intensive audits and follow-ups undertaken by the Authority and some companies that managed to pay bonuses and performance awards to their employees during last year.

Excise Duty, which accounted for 14,4 percent of total revenue, contributed $512,2 million against a target of $569 million, resulting in a negative variance of 10 percent. The highest contributions to the revenue head was from fuel and beer that contributed 71 percent and 20 percent respectively.

The revenue head was affected by a decline in volumes of petroleum products during the period under review compared to 2013.

“Petrol imports declined from 472,9 million litres in 2013 to 455,2 million litres in 2014. Diesel imports declined from 935,5 million litres in 2013 to 910,7 million litres in 2014,” Mr Pasi said. Value Added Tax gross collections for 2014 were 2 percent lower after $1,22 billion was collected against a target of $1,24 billion.

Net collections under the revenue head were $990,3 million against $1,24 billion after the deduction of VAT refunds of $226,4million, which constitutes 19 percent of gross VAT.

VAT on local sales and on imports, which contributed 14 percent apiece to total revenue, ranked in $509,4 million and $480,9 million respectively against a target of $748,8 million and $486,2 million respectively. Mr Pasi said collection of VAT on local sales were affected by the reduction in local industrial capacity utilisation which resulted in low levels of production on goods that attract VAT.

“The liquidity challenges have negatively affected production as well as companies’ capability to secure funds for the procurement of efficient production machinery and manage cash flows.

“In addition low disposable incomes negatively affected consumer spending on goods that attract VAT,” he said.

Gross collections under Corporate Income Tax were $373,9 million while net collections amounted to $372,1 million against a target of $426 million, resulting in negative variances of 12 and 13 percent respectively. The negative performance of the revenue head was attributed to the general poor performance of the economy due to various factors such as liquidity constraints, obsolete equipment, lack of lines of credit, high cost of production and the reduction in industrial capacity utilisation from around 39,6 percent in 2013 to 36,3 percent last year.

“This had a negative impact on company profits thereby contributing to the revenue head’s failure to meet expectations,” Mr Pasi said.

Taxes on Goods and Services, which include VAT on local sales and imports, customs duty and excise duty, raked in $2,1 billion in gross collections that was 7 percent lower that the target of $2,2 billion.

Net collections were also down 18 percent to $1,8 billion against a target of $2,2 billion. “Revenue performance was mainly affected by the prevailing poor economic conditions. VAT contributed the bulk of the net revenue with $990,3 million, Customs Duty contributed $329,6 million and Excise Duty brought in $512,2 million,” Mr Pasi said.

Gross collections from customs duty were $341,6 million against a target of $430 million. Cumulative net collections for the year were 23 percent lower at $332,9 million against a target of $430 million while refunds were $8,7 million. The revenue head was affected by a reduction in volumes of imports that attract duty.

Mining Royalties collections at $191,67 million were up 10 percent against a target of $175 million after mining companies paid up some arrears from the previous years. Other taxes including revenues from withholding tax on tenders, domestic dividends, interest, remittances, fees and tobacco levy contributed a cumulative $211,6 million, 12 percent more than the target of $189,7 million. Withholding tax on tenders and domestic dividends recorded positive variances of 199 percent and 21 percent respectively.

Tobacco Levy contributed $9,8million, 8 percent lower than the target while Capital gains tax and Withholding tax contributed $28,5 million.

Mr Pasi attributed the positive performance to the payment of dividend to shareholders by some companies and improved revenue collections from Non-Residents’ Tax on Fees and Remittances due to investigations and audits done last year. The revenue head was affected by limited mortgage finance in a few financial institutions that resulted in the depressed performance of Capital Gains Tax while liquidity challenges affected the performance of the stock market resulting in depressed collections of withholding tax.

You Might Also Like

Comments

Take our Survey

We value your opinion! Take a moment to complete our survey