It says high levels of dollarisation have also driven transactions into the shadow economy which is synonymous with lower tax compliance.
“As per the MoFED (Ministry of Finance), forex revenue into the country’s coffers accounted for only 48% of collections versus an estimated 78% of forex transactions in the economy,” it says. “This is against growing government USD obligations.”
Zimbabwe has proposed a $58.2 trillion budget against revenue of $53.9 trillion for next year which includes among others:
“If successful, the recently introduced measures might have the intended effect of expanding revenue capacity. However, the downside to the sweeping reforms might be the Laffer curve effect, which could see revenues falling further,” IH Securities says.
“For corporates, the aggregate impact of the new taxes on operational costs is likely to result in thinning margins in 2024, thereby impacting earnings for listed companies. However, at current levels, multiples are likely to remain attractive and below historical averages emanating from prices trading at a steep discount, leaving select buying opportunities on both the ZSE and the VFEX.”
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This post was last modified on December 2, 2023 3:05 pm
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