VAT revenue collections jump 50pc on fiscalisation

Source: VAT revenue collections jump 50pc on fiscalisation | The Sunday Mail September 24, 2016

Munyaradzi Mlambo
THE Zimbabwe Revenue Authority (Zimra) has recorded an over 50 percent increase in Value Added Tax (VAT) collections on local sales in the first seven months of the year, compared to the same period last year after connecting most fiscal devices installed in 2010 and 2011 directly to its servers. Fiscal tax registers record financial transactions from businesses and transmits the data in real time to tax collectors.

Experts believe that the spike in revenue collections, especially after the gadgets were introduced, could possibly mean that there have been leakages in the tax collection system. Last week, Zimra board chairperson Mrs Willia Bonyongwe told The Sunday Mail Business that the success of fiscalisation pushed Government to widen its tax bracket to categories that are either paying VAT through manual returns or are non-compliant.

“You are aware that Zimra has now connected most of the fiscal devices installed in 2010/2011 directly to their servers. This had a positive impact on VAT collections because it not only increases compliance but it mitigates against under declarations. “VAT on domestic sales rose by more than 50 percent during the first seven months of 2016 compared to 2015. This was most notable from May 2016.

“Therefore, this is now being extended to other categories who are currently either paying VAT through manual returns or are non-compliant,” said Mrs Bonyongwe. Government recently proposed to extend the fiscalisation programme to category A, B and D taxpayers from January 2017.

The categories cover VAT registered operators whose annual turnover is less than US$240 000. Category A and B is for operators who submit VAT returns bi-monthly, while category D is for VAT registered operators who submit VAT returns in any other month as approved by the Commissioner-General of Zimra. The first phase of fiscalisation is scheduled to be completed this month.

Expanding the exercise has raised expectations Government will be able to shore up the national purse. According to Mrs Bonyongwe, broadening fiscalisation will enhance monitoring of the sales transactions, improve enforcement and compliance and at the same time eliminate corruption and VAT fraud.

“It will also preserve sales records for audit purposes as the information obtained is in electronic and standard format, which is easier to analyse when doing audits,” she added. During the first six months of the year, the country’s tax collections missed the target by more than 12 percent as most of the tax heads underperformed.

Apart from introducing electronic tax registers, fiscalisation also involves installing gadgets such as electronic printers and electronic signature devices. Government made fiscalisation legally enforceable through Statutory Instrument 104 of 2010 on June 8, 2010. In Tanzania, there has been an appreciable increase in revenue collections after the Tanzianian Revenue Authority compelled retailers to install fiscal devices.

As a result, tax collections for Arusha improved by 9,6 percent between 2010 and 2011 and 23 percent for 2011 to 2012. Due to the full deployment of the electronic tax register, Tanzania expected to ramp up collections to US$370 million (600 billion shillings) a month, up from US$250 million (400 million shillings) in 2014.