BUSINESS: ZIMRA COLLECTS $406M:
THE Zimbabwe Revenue Authority (Zimra) says revenue performance remains on a positive trajectory, with gross collections for July hitting $406,13 million, which was 20,80 percent above target. Zimra’s target for the month was $336,20 million. Net collections were $372,58 million after deducting refunds amounting to $33,55 million, translating to a positive variance of 10,82 percent.
In the same period last year, $286,49 million was realised, implying that revenue collections grew by 30,05 percent this year.
Statistics from Zimra show that all revenue heads surpassed targets except for individuals, value added tax (VAT) on local sales, capital gains tax (CGT) and CGT withholding and Tobacco Levy; which recorded negative variances of 11,36 percent; 28,97 percent; 11,19 percent; 44,29 percent and 12,40 percent, respectively.
The huge variance on VAT on local sales is attributed to VAT refunds which constituted 37,17 percent of VAT gross collections.
Collections of $62,73 million from the individuals head were 11,36 percent below the target of $70,77 million. The revenue head experienced a negative growth of 3,37 percent, compared to the same period last year.
The individuals head was suffocated by the non-payment of salaries by some companies due to operational challenges, and the huge debt that stood at $887,93 million by end of July 2018.
According to the July revenue report, strategies to improve the revenue head’s performance include “tax audits that are both corrective and deterrent aimed at encouraging voluntary compliance; increased taxpayer education and debt management strategies including write offs of uncollectable debt and waiver of penalties and interest”.
Collections from the companies’ revenue head were $53,64 million, surpassing the set target of $15,80 million by 239,50 percent. The tax head recorded a growth in collections of 315,89 percent from $12,90 million realised in the comparative.
Zimra said the tax head’s performance can be attributed to the significant amount of VAT refunds offset against corporate income tax by an unnamed company, and early payments towards the second Quarterly Payment Date (QPD), which is due this month.
Taxpayers taking advantage of the tax amnesty to settle their obligations without paying penalties and interest, also pushed the revenue head’s performance.
Gross VAT on local sales of $89,87 million were 13,04 percent above the $79,50 million target, with net collections after deducting current refunds of $33,40 million, amounted to $56,47 million.
This translates to 28,97 percent below the set target. The positive performance in gross terms is attributed to the effects of inflation, improved voluntary compliance and the impact of the tax amnesty.
Collections from VAT on imports were $49,34 million, surpassing the set target for the month by 49,52 percent.
Revenue collections grew by 29,72 percent from $38,04 million compared to the same period last year driven chiefly by an increase in VAT paying goods such as motor vehicles, machinery, lubricating oils and tyres.
Imports cost insurance and freight (CIF) value increased to $557,93 million this July from $502,53 million in the same period last year.
Gross customs duty collections also shot up to $42,36 million against a target of $29,70 million, implying a positive variance of 42,62 percent. The positive performance is attributed to increased imports mainly motor vehicles, parts of machinery and lubricating oils. Imports CIF value increased to $557,93 million this July from $502,53 million in the same period last year.
Similarly, revenue collections from excise duty were $69,50 million against a target of $68,87 million. Major contributing sub-revenue heads were fuel, airtime and beer, which contributed 69,28 percent; 12,77 percent and 10,90 percent respectively.
Zimra said the positive performance of the revenue head is attributed to the jump in imported fuel volumes compared to the same period last year.
Petrol imports rose to 44,54 million litres in July compared to 34,15 million litres in July last year. Diesel imports also increased to 91,48 million litres from 71,12 million litres in the comparative period.
However, petrol imports decreased by 27,90 percent from 61,78 million litres in June to 44,54 million litres last month.
At the same time, diesel imports fell from 113,98 million litres in June to 91,48 million litres in July this year.
The negative performance by excise on fuel can be attributed to the decline in fuel imports because of shortage of foreign currency while excise on beer and airtime was buoyed by increased consumption during the 2018 Russia World Cup Soccer tournament.
Mining royalties contributed $8,64 million, above the target of $8,60 million driven by improved mineral prices particularly gold.
Zimra expects the positive trajectory to continue owing to “improved corporate profitability and a seemingly re-emerging general demand”.
Further, the conclusion of harmonised polls also means that investment commitments, which hit $16 billion between January and June this year, are expected to start materialising, and have a positive impact on revenue collections.