Zimra tax collections drop 3 pc in H1

29 Jul, 2015 - 10:07 0 Views
Zimra tax collections drop 3 pc in H1

The Sunday Mail

. . . . as retrenchments, slowing economy take their toll

. . . . Excise duty increase help buck the downtrend

 

Willia Bonyongwe

Willia Bonyongwe

REVENUE collections dropped 3 percent to US$1,66 billion in the first six months of the year from US$1,72 billion collected in the same period a year ago, as the formal economic activity continued to shrink.

The taxman had targeted to collect US$1,76 billion during the period.

According to the Zimbabwe Revenue Authority (Zimra)’s revenue performance for the first half of the year, collections from all tax heads – except for collections for VAT (Value Added Tax) on imports (10 percent) , carbon tax (15 percent) and excise duty (21 percent) – dropped.

However, individual tax collections at 23 percent and excise duty at 21 percent contributed the bulk of the revenues, while VAT on imports and VAT on local sales both weighed in at 13 percent.

Retrenchments and company closures affected the individual tax head the most as collections during the January-June period slumped 12 percent to US$390 million from US$429,5 million a year ago.

Similarly, the portion of income hived off companies through corporate income tax also tumbled 15 percent from a year earlier to US$167 million.

Liquidity challenges, limited credit facilities and high operational costs continue to negatively affect companies.

Consumers have also not been spared.

Gross collections on VAT on local sales missed the collection target by 16 percent to US$366,5 million.

But though consumer spending has been slowing, imports have been growing.

Naturally, VAT on imports exceeded the target by 10 percent as US$215,2 million was collected.

Collections were however 4 percent lower than revenue collections in the same period a year ago.

Likewise, custom duty revenues rose 17 percent from 2014 to US$160,4 million

Excise duty review lifts revenues

However, the upward review of excise duty on petrol and diesel helped buck the downtrend, with collections rising 43 percent from US$241,4 million last year to US$346 million in the review period.

Excise duty on fuel contributed 77 percent of the total.

Beer and airtime came in at 10 percent and 6 percent, respectively.

Royalties suffer from low commodity prices

As international commodity prices have been retreating, so, too, has been the contribution made by local mining royalties to the fiscus.

Zimra notes that royalties at US$39,8 million were 65 percent lower than in 2014.

In a statement accompanying performance report, Zimra board chairperson Mrs Willia Bonyongwe said “a myriad of challenges” continues to affect the mainstream economy.

“The shrinking of formal economy has led to the growth of the informal sector who contribution to revenue is significant. Such challenges have seen some clients failing to honour their tax obligations, resulting in the Authority failing to meet the set target for the first half of the year,” she said.

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