Net revenue collections fall 3pc

Net revenue collections fall 3pc Willia Bonyongwe
Willia Bonyongwe

Willia Bonyongwe

Walter Muchinguri Assistant Business Editor
Net revenue collections for 2015 fell 3 percent to $3,50 billion from $3,60 billion in the previous year. It was, however, marginally above the revised target for the year of $3,46 billion. The initial target for the year was $3,76 billion.

According to the Zimbabwe Revenue Authority (ZIMRA), net collections could have been as high as $3,62 billion if it was not for judicial and policy measures that resulted in it paying out a total of $384,15 million.

Gross collections for the year amounted to $3,88 billion before ZIMRA paid out refunds of mining royalties amounting to $384,15 million (up 61,21 percent from prior year), resulting in net collections of $3,50 billion.

“During the year, there was retrospective refunding of Mining Royalties emanating from a court order, and change of Income Tax policy measures on a major construction project amounting to $123 531 296,15.

“Without the above judicial and policy measures, the net collections would have been $3,62 billion against the original target of $3,76 billion. This would have resulted in collections being 105 percent of the revised target of $3,46 billion,” ZIMRA said in its 2015 fourth quarter update.

Gross collections for the fourth quarter were $1,12 billion while net collections were $959,07 million after Value Added Tax, Mining Royalties and Customs Duty refunds of $162,10 million.

The net collections translated to 92 percent of the quarterly target of $1,038 billion reflecting a 3,8 percent decline in net revenue collections in the fourth quarter of 2015, compared to the same period in 2014.

Board chairperson Mrs Willia Bonyongwe said the decline in revenue collections was a reflection of the state of the economy.

“The major challenges facing Zimbabwe’s economy remain unresolved. These are the erratic supply and high cost of energy, the high cost of capital and unavailability of adequate capital, and the use of the relatively strong dollar, among other factors.

“They all combined to erode the country’s competitiveness. Company closures and the job losses escalated during the year under review and this is a continuing trend. The situation was exacerbated by the plummeting commodity prices on the international markets and the winding off of quantitative easing in the United States of America. These economic variables negatively affected profitability of companies and clients’ ability to pay debts, resulting in generally low trends of revenue collections,” she said.

Individual Tax contributed the most accounting for 22 percent of annual revenue collected followed by Excise Duty 20 percent, VAT on local sales 16 percent, VAT on imports 13 percent, Company Tax 12 percent, and Customs Duty 10 percent.

Individual tax contributed $777,83 million against a target of $835 million while Excise Duty brought in $714,22 million against a target of $590 million, Vat on local sales contributed $547,07 million against $641,10 million, VAT on imports $440,65 million against $409,90 million.

Company Tax contributions were $424,68 million against a target of $448 and Customs Duty brought in $337,16 million against a target $390 million.

Major revenue heads that surpassed their targets were Excise Duty 21,05 percent, VAT on imports 7,50 percent, Carbon Tax 17,88 percent and Withholding Tax on Dividends, Fees, Interest & Remittances (DFIR) 2,14 percent.

Excise Duty, VAT on local sales, DFIR and Company Tax contributed more in 2015 compared to 2014. On the other hand, Individual Tax, VAT on imports, Mining Royalties and Other Taxes contributed less in 2015 compared to 2014. Customs Duty, Withholding Tax on Contracts and Carbon Tax remained unchanged.

“The revenue collections for 2015 reflect largely the subdued state of the economy during the reporting period. However, it also reflects the limitations of ZIMRA in terms of lack of robust enforcement particularly on Local VAT, incomplete digitalisation and budgetary constraints.

“ZIMRA is working on a comprehensive tax management system to increase the efficiency and cost of collecting while at the same time increasing revenues by plugging all the leakages.

“The tax management system should be operational by end of 2016. This will have a huge positive impact on all tax heads. Meanwhile, ZIMRA is going to vigorously enforce all current fiscal legislation to increase the level of compliance. The public is urged to assist the authority in identifying businesses which do not offer fiscal receipts or who do not pay their taxes.

“ZIMRA is also working on introducing cargo tracking in 2016 and increasing the number of scanners, subject to availability of funding. This will cut down on smuggling.

“All these initiatives will greatly improve the convenience of our stakeholders and also fulfil our goal to serve efficiently,” Mrs Bonyongwe said.

Share This: