HomeBusiness DigestElectronic transactions, inflation boost revenue collections: Zimra

Electronic transactions, inflation boost revenue collections: Zimra

THE Zimbabwe Revenue Authority (Zimra) says the current inflationary environment and the widespread use of plastic as well as mobile money transactions have enhanced revenue collection, especially for revenue heads such as value-added tax (VAT) in H1 2018.

By Melody Chikono

Zimbabwe’s annual rate of inflation for June gained 0,20% to 2,91% from 2,71% in May, while monetary transactions are now dominated by electronic payment systems sitting at more than 96%.

Zimra, which surpassed its revenue targets in H1, says the positive revenue performance is also attributed to the tax collector’s various revenue enhancement projects, increase use of automation and a resolute stance against corruption.

However, while the rest of the tax heads performed above expectation, three revenue heads, namely individuals, net VAT on Local Sales as well as other Indirect Taxes, performed below expectation.

Individual tax stood at US$416,2 million during the period, a 0,68% drop against the H1 target of US$419,2 million.

Net VAT missed the target of US$472,3 million by 8,94% to stand at US$430 million in H1 2018 while other direct taxes at US$20 million missed the target of US$22,1 million for the period by 9,4 %.

Zimra chairperson Willie Bonyongwe in an a update said the performance of the Net VAT on Local Sales was disturbing not only because the variance is so huge, but also because the revenue head had picked up remarkably following the introduction of the 10% withholding tax.

“Zimra has strengthened controls in the payment of VAT refunds to curb fraudulent payments. In the past the Authority was refunding VAT which had not yet been collected and will continue audit of refunds and enforcing payments of withholding tax, especially for non-compliant or unregistered taxpayers,” she said.

“Revenue collections from the Individuals tax head amounted to US$416,42 million against the targeted US$419,28 million, giving a negative variance 0,68%. Although the revenue head marginally fell short of the target, revenue collections grew by 19,86% from the US$347,41 million realised during the same period last year.”

Bonyongwe added that the performance of the revenue heads was partly affected by salary cuts, retrenchments and irregular salary payments during the greater part of the first half despite the fact that some organisations offered back-pay, salary adjustments and performance awards.

During the period, corporate income tax (companies) collections were US$356,3 million against the targeted US$210 million, translating to a 69,67% positive variance.
Overally, revenue collections grew by 66,3% compared to the same period last year where collections were US$214,2 million.

The positive performance was attributed to improved profitability by some companies as well as the increased usage of electronic and plastic money.
Bonyongwe said that during the period a number of corporate taxpayers responded to the amnesty to clear their outstanding debts or agree on payment terms to benefit from the remission of penalties and interest.

“The increased usage of plastic and mobile money transactions also had positive effect on revenue collections. However, VAT expenditures (mainly zero-rating and exemptions) and, consequently, VAT refunds had a negative impact on the performance of the revenue head,” she said.

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