Individual tax leads in Q3 Zimra revenue collections

THE Zimbabwe Revenue Authority (Zimra) says gross revenue collections for the third quarter ended 30 September 2020 were 31,19 percent above target at $58,81 billion with the individual tax head leading in contributions.

Despite the Covid-19 setback on the economy in the first half of the year, the revenue authority reports that more businesses resumed normal operations in the third quarter following relaxation of lockdown restrictions. This resulted in more businesses being able to meet their tax obligations, said Zimra in its revenue performance report for the quarter under review.

The sweeping monetary policy interventions by the Government, also aided the positive trajectory, it added, noting that caution had to be taken in granting tax incentives in the mid-term budget review process as the impact of the Covid-19 pandemic was not yet clear.

“Gross collections for the quarter were $58,81 billion, translating to 31,19 percent above the targeted $44,83 billion.

After deducting refunds of $1,81 billion, net collections came down to $57 billion. This gives a positive variance of 27,16 percent,” said Zimra.

“The need to maximise domestic revenue mobilisation in the given environment guided the level to which tax incentives could be granted when compared to what other nations could afford.”

Compared to the same period last year where $6,42 billion was collected, nominal net revenue collections grew by 788,16 percent. “All revenue heads registered positive growth in nominal terms,” said Zimra.

Major contributions came from the individuals tax head at 15,26 percent, companies tax 14,63 percent while excise duties contributed 14,17 percent, Value Added Tax (VAT) on local sales (13,24 percent) and VAT on Imports (13,08 percent).

“The Intermediated Money Transfer Tax (2 percent) lost its momentum, missing the target of $5,86 billion by $1,94 billion (32,23 percent) and contributing only 6,86 percent to total revenue for the quarter,” said the tax collector.

This was partly due to the monetary policy interventions introduced to harness the local currency depreciation that was threatening economic stability. Other statutory obligations namely mining royalties, withholding taxes and other taxes missed the quarterly targets, mainly due to operational challenges in the mining sector caused by energy shortages and the Covid-19 pandemic, said the tax authority.

During the period under review, Zimra said continued focus was on supporting the Transitional Stabilisation Programme (TSP) in areas of restoration of fiscal balance, ease of doing business, and plugging out revenue leakages.

On the outlook, Zimra said the momentum in revenue collection was expected to be gained in the last quarter of the year with the revenue collection target for the year seen increasing to $172 billion. Growth is expected to come from increased productivity with the opening up of more business sectors in the economy.

“In addition, the Government’s strategy to target low hanging fruits in various sub-sectors of the manufacturing industry is expected to attract the much-needed investment for domestic production,” said Zimra.

“South Africa has opened its borders and cross-border trade is, therefore, expected to increase thereby feeding into higher collections in import duties.

“The weather forecasts are projecting good rains in the coming farming season; this boosts economic activity in all sectors as value chains can then be easily promoted,” said Zimra.

The authority, said it has already started aligning its strategies with the National Development Strategy (NDS) 2021 to 2025 and will play its expected role in mobilising domestic revenue for the national goals to be achieved.

“The authority is also working on improving business processes and reducing human interface, which should reduce rent-seeking opportunities,” said Zimra. —chronicle.co.zw