Revenue collection increases, hits $1bn in Q3

Source: Revenue collection increases, hits $1bn in Q3 | The Herald October 15, 2016

Business Reporter—
Measures being implemented by the Zimbabwe Revenue Authority (ZIMRA) to increase revenue collection have begun bearing fruit with revenue collected during the third quarter of the year increasing six percent to $919,91 million from $866,96 million collected in the last quarter.

The $919,91 million was also 0,22 percent above the target for the quarter of $917,33 million.The revenue authority had a particularly good performance in September where it collected $364,08 million, which is 4,73 percent above the gross target.The net collection for September was $351,99 million, which was 1,26 percent above the target, a feat which has not been achieved in a long time.

Since the beginning of the year, Zimra has been seized with improving operational efficiency and effectiveness through automation, eradicating corruption and increasing the level of compliance amongst the taxpayers.Zimra board chairperson Mrs Willia Bonyongwe said the initiatives helped to unmask truant and unregistered taxpayers.

“The above initiatives, i.e. automation and enforcement, unearthed significant irregularities relating to those who under-declared their revenues, and those who were not even registered.“Consequently 3 232 new taxpayers were registered and 106 cases were referred to audits. But more importantly, non-compliant taxpayers are increasingly coming to the Authority to normalise their relationship and this is commendable,” she said.

Mrs Bonyongwe said revenue collection was also aided by the enactment of Statutory Instrument 64.

“The SI64 has in effect stimulated local manufacturing production which improved capacity utilisation by the companies whose products are protected by the SI.“This had a positive outcome on their profitability and a marked improvement in their contribution to the fiscus during the quarter.

“SI64 should, other things remaining equal, also have a multiplier effect on the economy in the medium term with rising employment levels and increasing aggregate demand,” she said.

The increase in gross collections did not, however, translate in an increase in net collection, which at $854,17 million, were 6,89 percent shy of the quarter’s target of $917,33 million, but 2,17 percent above last quarter’s net collection of $825,33 million.

Individual tax continued to contribute the most at 23,89 percent followed by excise duty at 18,50 percent, VAT on local sales 18,43 percent and VAT on imports 10,51 percent. The remaining tax heads contributed the remaining 28,67 percent.Individual Tax’s contribution at $204,03 million was 0,91 percent above the quarterly target of $202,20 million due to previous debt repayment and set offs.

Excise duty’s contribution came in at $157,98 million which was 17,86 percent below the target of $192,33 million largely due to low disposable incomes as reflected in the financial statements of the companies providing such goods and lower consumption of fuel due to increasing levels of transit fraud and direct smuggling especially through Forbes Border Post, and the illegal crossing points at Marymount in Mutare and Imbeza in Penhalonga.

“Transit fraud will be effectively curbed by the Cargo Tracking System.“Although the revenue authority failed to develop an interim cargo tracking system as reported in the last quarterly review, the good news is that the company which won the tender for the more comprehensive system, Techno Brain (T) Ltd of Tanzania has already started installation.

“They indicated that they will complete by the end of October 2016 and their progress to date indicates they are likely to meet their target.“The aim is to integrate the cargo tracking system with other operational systems in ZIMRA and the systems of related stakeholders to tighten the system and make life difficult for smugglers in Zimbabwe,” Mrs Bonyongwe said.

VAT on local sales collection were 3,52 percent above target at $157,45 million to automation, more enforcement and compliance checks and VAT on import collected $89,79 million against a target of $86,90 million resulting in a positive variance of 3,33 percent.

Meanwhile, Mrs Bonyongwe said the money that Zimra is owed rose by a marginal 0,60 percent from $2,63 billion at the beginning of the quarter to $2,65 billion with business accounting for the bulk of the debt at 76,90 percent, followed by parastatals 14,35 percent and councils 8,75 percent.

“Although there was a marginal increase in debt, vigorous debt follow-ups resulted in debt reduction in individual tax by 3,91 percent and corporate tax by 4,81 percent.“The expectation is that the newly announced measures to withhold VAT by specified companies will help to curb the growth of the debt and improve Government’s cash flows,” she said.