The Zimbabwe Revenue Authority (Zimra)’s net revenue collection for the second quarter of 2020 surged 542 percent to $20,11 billion from the $3,13 billion recorded during the same quarter in the prior year.
This was 42 percent above the target of $14,09 billion set by Treasury. While the authority exercised strategies to improve revenue collection, the growth was also driven by the hyperinflationary environment, which has seen prices of goods and services being adjusted upwards.
“While all revenue heads registered positive growth in nominal terms, there was no growth.
“All revenue heads performed above 2019 levels in nominal terms because of the hyperinflationary environment that the country is experiencing,” said vice chairman Josephine Matambo.
During the quarter under review, companies, individuals, excise duty and value added tax (VAT) on local sales were the major contributors to revenue collected accounting for 21 percent, 17 percent, 15 percent and 10 percent in that order.
A total of $4,13 billion was collected under the companies revenue head.
According to Zimra, companies recorded positive performance mainly due to the nominal profits recorded by most businesses on the back of the hyperinflationary environment.
Figures from the authority also show that $3,46 billion was collected from individuals against a target of $1,7 billion.
The positive performance was mainly a result of cost of living adjustments, interbank rate adjusted salaries and allowances paid by companies to cushion employees from the effects of high inflation.
VAT (value added tax) on local sales came in at $2,1 billion against a target of $2,36 billion resulting in a negative variance of $261 million.
“The revenue head missed the set target after deducting refunds amounting to $1,49 billion. This unprecedented refund level was a deliberate tax administration measure on deserving claims to mitigate cash flow challenges for businesses during this Covid-19 environment,” said the vice chairman.
Excise duty amounted to $$2,9 billion registering a nominal growth of 314 percent from $715 million recorded during the same quarter last year. The amount was also above target by 5 percent.
Also on the positive, the Intermediated Money Transfer Tax (2 percent tax) amounted to $2,13 billion, which was 20 percent ahead of target as the use of data increased during the quarter with businesses seeing up home stations during lockdown.
On the other hand, the ban on non-essential imports and closure of borders at the beginning of the lockdown had a negative impact on customs duty and VAT on imports reducing their general contribution to collections and set target.
Going forward Zimra will continue with its efforts to enhance revenue collection through plugging leakages and improving ease of doing business.
This is also in line with the authority’s plan to contribute to economic development as the country pushes to become an upper middle income economy by 2030.