Zimra collects $20bn in Q2 taxes
THE country’s net revenue collections for the second quarter have surpassed target by 42,75 percent to $20,11 billion against a projection of $14,09 billion.
In a revenue performance report for the second quarter ended June 30, 2020, Zimbabwe Revenue Authority (Zimra) vice board chair Mrs Josephine Matambo said revenue collections maintained a positive trajectory in nominal terms despite the adverse environment that has been exacerbated by the Covid-19 pandemic.
“Net revenue collections for the second quarter of 2020 amounted to $20,11 billion against a target of $14,09 billion.
“Net revenue collections grew by 542,24 percent in nominal terms from ZWL$3,13 billion that was realised in the same period in 2019. While all revenue heads registered positive growth in nominal terms, in real terms there was no growth,” she said.
The improved revenue performance was attributed to factors that include the removal of revenue leakages, antismuggling efforts and increased risk audits.
“The authority remains committed to plugging revenue leakages through intensified anti-smuggling efforts and increased risk-based audits. To improve the ease of doing business, Zimra is simplifying its business processes.
“A number of modules under the customs modernisation programme were completed in the quarter, and the procurement preparations are underway for the modern Tax Administration System (TaRMS) for the domestic taxes administration,” she said
During the quarter under review, she said all revenue heads performed above 2019 levels in nominal terms because of the hyperinflationary environment that the country is experiencing.
The revenue enhancement strategies that the authority is implementing are expected to improve revenue collections in real terms as the benefits begin to manifest.
Such strategies include effective debt management, risk-based audits, antismuggling activities, post clearance audits, and improved business processes.
During the second quarter of 2020, these strategies were curtailed by the Covid-19 pandemic restrictions. Major contributors to revenue were companies (21 percent), individuals (17 percent), excise duties (15 percent), and Value Added Tax (VAT) on local sales (10 percent).
On companies’ contribution, Mrs Matambo said the revenue head recorded a positive performance mainly due to the nominal profits being recorded by most businesses as a result of the hyperinflationary environment. The authority’s compliance enforcement programmes also ensured sustained compliance under the difficult conditions of the lockdown. Though revenues dropped below target in April 2020, the eased lock down conditions in June boosted revenue collections as more businesses resumed operations, she said.
On the individuals head, Mrs Matambo said a positive performance was registered mainly buoyed by cost of living adjustments, interbank rate adjusted salaries and cushioning allowances paid by most companies to cushion their employees against high inflation scourge.
VAT on local sales revenue head missed the set target after deducting refunds amounting to ZWL$1,49 billion.
“This unprecedented refund level was a deliberate tax administration measure on deserving claims to mitigate cash flow challenges for businesses during this Covid-19 environment.
“However, the revenue head’s performance in gross terms was positive mainly due to the high inflation and depreciation of the exchange rate that pushed the prices of most goods upwards,” she said.
On the Intermediated Money Transfer Tax (IMTT), she said the authority continued with the compliance improvement strategies on the telecoms sector and mobile money platforms to ensure improved collections and this had a positive impact on collections.
“The tax head performed above target as the use of data increased during the quarter with businesses setting up home work stations during the lockdown,” said Mrs Matambo. Although excise revenue head was marginally above the set target, collections in the quarter were negatively affected by reduced economic activity due to travel restrictions during the lockdown.
The ban on non-essential imports and closure of some border posts at the start of the Covid-19 lockdown had a major negative impact on customs duties and VAT on imports, reducing both their contribution to the overall collections and performance against the set targets.
On the outlook, Mrs Matambo said Covid-19 continues to pose challenges for the local and global economy, and the authority has not been spared.
“The global economy continues in recession, with recent forecasts by the International Monetary Fund indicating that the global economy and Zimbabwean economy could contract by 4,9 percent and 10,4 percent respectively.
“Recovery from the Covid-19 shock is expected to be more gradual than expected as the country continues on level 2 lock down.
“Going forward into the third quarter of 2020, although lockdown measures were relaxed, allowing registered businesses to operate, business activity is anticipated to remain subdued due to reduced business hours and the risk of rising local infections,” she said. — @ okazunga