Mining royalties down 39 percent

HARARE - Zimbabwe’s mining royalties missed the half year target by 39 percent on the back of depressed international mineral prices, the Zimbabwe Revenue Authority (Zimra) has said.

The national tax collector’s chairperson Willia Bonyongwe yesterday said mining royalties contributed $39,8 million against a target of $64,9 million, and were 65 percent down compared to the same period last year were $112,6 million was collected.

Bonyongwe attributed the poor performance to depressed international mineral prices and lower sales.

However, market watchers say that the poor performance was a direct result of government’s move to impose a 15 percent VAT levy on all platinum miners as well as the move to “conscript” all diamond mining firms into a single entity in which government would be major shareholder. This resulted in subdued mineral production.

For the year ended December 30, 2014, mining royalties exceeded target by ten percent, amounting to $191,6 million against a target of $175 million.

Zimra commissioner general, Gershom Pasi, early this year attributed this to arrears from the previous year being honoured in the year under review.

While in 2013, mining royalties amounted to $133,7 million against a target of $245 million resulting in a negative variance of 45 percent.

“Companies have not been performing to their optimum capacity since government started all this talk about an additional 15 percent tax as well as the consolidation of diamond firms,” said Harare based analyst, John Robertson.

Meanwhile, Zimra also missed the target revenue collection by six percent after collecting $1,66 billion for the first half of the year due to the shrinking formal economy, against a target of$1,76 billion.

Net collections also slumped three percent from the same period last year when $1,72 billion was collected.

In the period under review, value-added tax (Vat) on imports, excise duty and carbon tax were the only revenue heads that surpassed their set targets.

Individual tax made up the bulk of the revenue collected in the first half of 2015, contributing 23 percent, followed by excise duty (21 percent).

Both Vat on imports and Vat on local sales contributed 13 percent each.

Individual tax revenue collections amounted to $379,5 million against a target of $390 million, resulting in a negative variance of three percent, while corporate income tax declined by 15 percent to $167,5 million against a target of $185 million.

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