Zim generates new $100m revenue

HARARE - Zimbabwe's cash-strapped government has generated an additional $100 million in revenue with the assistance of an international auditing firm.

The latest development will come as a relief to President Robert Mugabe’s government, which has been struggling to pay civil servants on time for the past two years due to declining revenue streams emanating from worsening economic conditions.

Tax Inspectors Without Borders (TIWB) — a project set up by the United Nations in 2015 as an innovative attempt to address widespread tax avoidance by multinational enterprises in developing countries — said it has so far generated more than $260 million in additional tax revenues to date in eight countries spanning the globe from Africa to Asia and Latin America.

“This includes more than $100 million in new tax revenues generated through TIWB audits in Zimbabwe, demonstrating the tremendous potential for future projects,” the organisation said.

TIWB organises deployment of highly-qualified tax experts to countries that request assistance with ongoing audits of multinational companies.

The projects focus on revenue recovery and improving local audit capacity while sending a strong message on the need for tax compliance.

“Developing countries face serious challenges in raising domestic resources to fund basic government services, and tax avoidance by multinational enterprises is a complicating factor,” TIWB secretariat head James Karanja said.

“The Tax Inspectors Without Borders programme is demonstrating how effective capacity building can make a difference toward the goal of ensuring that all companies pay their fair share of tax,” he said.

Thirteen projects are underway worldwide, in Botswana, Costa Rica, Ethiopia, Georgia, Ghana, Jamaica, Lesotho, Liberia, Malawi, Nigeria, Uganda, Zambia and Zimbabwe.

Economic experts, however, said Zimbabwe must implement strong economic policies if the country entertains any hope of economic turnaround and increased revenue streams.

This comes as the country has been struggling to meet its $3,7 billion revenue targets for the past three years due to massive company closures and high unemployment rate in the absence of key reforms.

Taxes fund the southern African country’s entire budget after multilateral funders like the World Bank and the International Monetary Fund (IMF) said they would only resume lending if Harare clears debts to global lenders.

Happias Kuzvinzwa-led Zimbabwe Revenue Authority (Zimra) said it missed the government’s revenue collection target by six percent in the six months to June, as the economy continues to struggle.

The first half’s revenue collection was 9,31 percent lower than last year’s figure.

The country raised $1,65 billion against a target of $1,75 billion in the half year as the economy continues to ride on choppy waters.

Zimbabwe is currently in the throes of a deep liquidity crunch and is trying to emerge from years of international isolation.

It however, needs to clear arrears of $1,8 billion to the World Bank, the IMF and the African Development Bank before it can access new credit to revive its faltering economy.

Zimra also said it had lost $356 million due to customs suppressing instruments which restricted imports in the first half of the year.

Revenue forgone as a result of VAT suppressing instruments — mainly import restrictions — amounted to $16,59 million.

Economists say the figure could rise in the second half after the government gazetted Statutory Instrument 64 in June, which outlawed the importation of an array of basic commodities, including finished dairy products.

Zimra said tax debt rose 33 percent to $2,63 billion and warned of further deterioration of the economy.

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