High debt affects Zimra collections

HARARE - The Zimbabwe Revenue Authority (Zimra) says high debt continues to negatively affect optimum revenue collection, as obligations increased to $4,55 billion during the third quarter ended September 30, 2018.

The revenue collector said despite a positive performance it has launched  a taxpayer education and engagement in a comprehensive drive to improve voluntary compliance.

“The authority’s performance is set to continue on a positive trajectory in boosting revenue collections through various revenue enhancement strategies as well as maintaining the momentum in the fight against corruption.

“Despite the positive performance, high debt continues to negatively affect optimum revenue collection,” Zimra said.

Debt which recorded $4,54 billion as at end of second quarter, increased to $4,55 billion as at end of the third quarter, the national tax collector said.

Revenue performance for the third quarter of 2018 surpassed set target for both gross and net collections.

Gross collections amounted to $1,28 billion against a target of $1,089 billion.

Net collections stood at $1,19 billion after deducting refunds of $95,94 million during the quarter, translating to 8,84 percent above the expected $1,089 billion.

Net revenue collections during the review period increased 22,56 percent from $967,76 million recorded during the previous prior quarter.

Excise duty contributed 21 percent to revenue while net value added tax (VAT) on local sales contributed 19 percent and individuals contributed 18 percent.

Individual tax surpassed the target of $212,21 million by 1,26 percent. Revenue collected amounted to $214,88 million, a 10,68 percent increase from $194,15 million collected during the previous comparable period.

Zimra said the improved performance on individual tax can be attributed to payment of allowances and back dated salaries by some sections of the economy.

The revenue authority recorded a 40,90 percent increase in corporate tax collections to $190,21 million against a target of $135 million.

The growth is attributed to profitability by some companies, debt recovery initiatives and increased mobile and electronic transactions.

VAT on local sales amounted to $293,91 million, a 22,92 percent variance from the targeted $239,10 million.

Revenue collections from VAT on imports surpassed the targeted $99,20 million by 41,36 percent.

A 28,89 percent growth in revenue collection was recorded during the quarter in comparison to $108,80 million that was collected during the same period last year.

“High demand for VAT paying imports to supplement locally produced goods as well as imports for retooling by some local companies enhanced the performance of the revenue head,” said Zimra.

Customs duty gross collections amounted to $116,68 million, a 40,34 percent increase from the $82,91  million recorded in prior comparable period.

Revenue from excise duty amounted to $216,41 million against a target of $205,02 million.

Withholding tax on contracts revenue collections increased 11,81 percent to $40,46 million from $36,18 million collected during the comparable period.

Carbon tax revenue collections increased 25,78 percent to $10,10 million during the review period, from $8,03 million collected during the third quarter of last year,  attributed to the increased importation of fuel as a result of the reduction in excise duty rates on fuel and consistent allocation of foreign currency to fuel importers.

Mining royalties revenue collections increased by 91,25 percent to $31,72 million from the $16,59 million that was recorded during the same period last year.

Dividends, fees, interest and remittances (DFIR) revenue collections increased 46,72 percent to $15,65 million from $10,67 million collected same period last year.
— The Financial Gazette

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