THE Zimbabwe Revenue Authority (Zimra) faces an uphill task of collecting about US$4,5 billion owed to Treasury by the private sector, Finance minister Mthuli Ncube has disclosed.
Speaking to parliamentarians in Bulawayo last week at the 2018 pre-budget seminar, Ncube said there was pressure from industry on Treasury to cancel the penalties accrued on the principal amount owed to the state. Businesses are currently singing the blues as economic hardships continue to deepen.
Companies have appealed to the monetary authorities whom they argue should avail foreign currency for the procurement of raw materials for production.
Monetary authorities, however, say the country has too many competing interests and needs for the “little” available foreign currency, hence the need to prioritise needs in the allocation of the foreign currency.
“We already have $2,3 billion that has not been remitted to us as Treasury. The amount of money Zimra is owed by corporates in business and others is about $4,5 billion. It is broken down as follows: $2,3 billion is the principal amount. An extra $1 billion over that is interest on the principal. We then have another $1 billion in the form of penalties,” Ncube said.
“What we are prepared to consider as Treasury is the writing off of the penalties. But I don’t think we can do much on the interest. Of course, we stand to be persuaded but I don’t think we can give in too much on that at the present moment. The principle of writing off the interest is not actually a good one.”
The disclosures come at a time Zimra announced it was in the process of improving its systems to enhance revenue collection. Zimra boss Faith Mazani told business delegates in mid-2018: “What we are saying is we want to improve our system and we are trying to reform our tax code and make it more convenient, but we need our clients to understand the issue of voluntary compliance.”
The tax agency, as part of its measures to encourage businesses to cough up, launched a tax amnesty programme for businesses that had not settled their arrears. The amnesty was extended by a further six months which lapsed on June 30 2018. Zimra, in its statements, revealed it had performed above expectations in the first half of 2018.
“Gross collections were $2,41 billion against the targeted $2,10 billion, thereby surpassing the set target by 15,09%. After deducting refunds of $98,88 million for the first half, net collections stood at $2,31 billion, which translates to 10,37% above the expected $2,10 billion.
“Net revenue collections improved by 35,94% from the US$1,70 billion that was realised during the first half of 2017 (H1, 2017). Major contributors to revenue were excise duty (19%), net VAT [value-added tax] on local sales (18%) and individuals (18%). The positive revenue performance is attributed to the authority’s various revenue enhancement projects, increased use of automation and a resolute stance against corruption,” Zimra announced in its financial statements.
Opposition political parties say that the government must lead the way in belt-tightening and reducing expenditure on unnecessary expenses.