Individual, company taxes dominate Zimra revenues
INDIVIDUAL and company taxes dominated the taxman’s first quarter revenue collections of ZW$88,26 billion, contributing 17,89% and 19,98%, respectively, a sign that the struggling citizenry and businesses will be under more pressure going forward.
Net and gross revenue collections were ahead of a set target of $86,52 billion by 2,01% and 4,73%, respectively, coming in at ZW$88,26 billion and ZW$90,61 billion.
e increase in revenue from individual and company tax is a result of Treasury increasing taxes in the 2021 National Budget in November last year.
ese included significant increments on presumptive taxes, taxes on small-tomedium enterprises and a demand that companies earning foreign currency pay their taxes in the medium of exchange on top of liquidating a portion of foreign currency income.
In a statement accompanying the Zimbabwe Revenue’s Authority’s (Zimra) revenue collections for the first quarter ending March 31, 2021 ,the taxman’s vicechairperson Josephine Matambo indicated that they would be enhancing revenue collections going forward.
“Zimra will continue intensifying automation of processes and improving the delivery of online services. Revenue collections are expected to remain positive in light of the various revenue enhancement initiatives Zimra has initiated, especially the drive to tap into the digital economy, which has been growing tremendously,” she said.
With the decline in net customs and excise duty by 1,8% and 10,25% to ZW$6,23 billion and ZW$11,04 billion, respectively, from targets of ZW$6,35 billion and $12,3 billion, more pressure is now on company and individual tax.
Net VAT on sales, another head traditionally higher than individual and company taxes, also missed its target by 20,71% with actual collections of nearly ZW$11,9 billion. Zimra blamed this on the lockdown in January 2021 which reduced the consumption of individuals and corporates.
She said the forein currency auction which was introduced in June last year has helped companies to keep afloat.
“e foreign currency Auction System has assisted industry to maintain or expand operations as companies were able to acquire raw materials at official exchange rates. Extra efforts made by Zimra to carry out compliance enforcement programmes in the difficult circumstances enhanced revenue collections for the first Quarterly Payment Date (QPD),” Matambo said.
“Relaxation of lockdown restrictions late into the quarter assisted companies to increase productivity, which resulted in improved revenue collections.”
Matambo noted that most employers continued adjusting salaries and wages upwards in line with the increasing cost of living at the beginning of the quarter.
“e continuous salary adjustments and cost of living adjustments enhanced individual nominal income resulting in the positive performance of this tax head,” she said
She said there has been a drop in customs and excise duty due to decreased traffic at the country’s borders as a result of the Covid-19 induced lockdowns and smuggling.
“ese two revenue heads performed below the set targets because of the lockdowns. e closure of ports of entry to the general public with the exception of trucks bringing in essential commodities affected revenue collections significantly,” Matambo said.
“Some traders opted to use undesignated crossing points where they were smuggling goods that were liable for duty payments. As for excise duty, though the consumption of beer and wines was not affected, revenue collected from petroleum products declined as most companies had to close shop or maintain minimal operations.”
Going forward, Matambo expects that an improvement on the stabilisation of the exchange rate due to the forex auction system will create some confidence in the economy and create stability.