ZIMRA misses revenue collection target as economy tightens

Zimbabwe’s tax agency says revenue collections in the quarter to September were $878.2 million, nine percent below the targeted $964 million, as mining and manufacturing companies struggle in an economy that is slowing sharply.

The southern African country finances its entire budget through taxes. Multilateral lenders like the International Monetary Fund and World Bank have said they will only resume supporting Zimbabwe once it clears its debts with the global lenders, possibly at some point next year.

The government in July lowered revenue projection to $3.76 billion from $3.99 billion in acknowledgement of the flatlining economy and revised economic growth projections to 1.5 percent from the initial 3.2 percent.  The budget deficit is seen at $400 million.

The Zimbabwe Revenue Authority (Zimra) said the quarterly collections were lower than $884 million tax revenue achieved during the same period last year as key tax heads, especially mining royalties and corporate tax underperformed.

The bulk of the revenue was realised from individual tax, excise duty and Value Added Tax (VAT) on local sales which contributed 22 percent, 20 percent and 16 percent respectively.

Mining royalties at $17 million were 55 percent below target.  Year on year, the sector’s contribution fell 47 percent from $33.12 million in 2014.

Corporate tax contributed $85.14 million of total revenue against a target $124 million.

“The performance of the revenue head (corporate tax) was dampened by reduced margins as the local companies felt the heat from competing imports. Company closures also continued to depress the revenue head,” said board chair Willia Bonyongwe.

Outstanding corporate tax income as at 30 September was $402 million. Tax forgone through tax incentives amounted to $5.17 million.

Revenue collections from VAT on imports for the quarter were $116 million, surpassing the $104.9 million target.

Net VAT on local sales amounted to $136.2  million against a target of $161.1 million.

Customs duty at $89.3 million was 11 percent below target while excise duty amounted to $176.2 million against a targeted $151 million.

Excise duty on fuel was the main contributor to the segment at 78 percent. Excise duty on beer and airtime contributed eight and five percent respectively.

Cumulatively, net revenue collections as at 30 September amounted to $2.5 billion.-The Source

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