ZIMRA squeezes US$83 million more from companies

THE Zimbabwe Revenue Authority (Zimra) managed to squeeze US$83 million more than their target from companies as tax authorities launched an aggressive blitz on firms to settle their outstanding Pay As You Earn (PAYE) obligations especially in an environment where Government is desperate for financial resources.

Figures released today outlining the Authority’s revenue performance for the first half of the year show that Zimra raked in more than US$429 million under the Individual Tax head from the targeted US$346 million, yielding a positive variance of 24 percent.
The performance, however, tempered the decline in carbon tax, value added tax (VAT), customs duty and excise duty.

Despite the positive performance, the taxman doesn’t expect the tax head to continue in the medium term because of “closure of companies, scaling down of operations as well as retrenchments which affect revenue collection”.

Mining Royalties
Similarly, collections from mining companies of US$113 million exceeded the target by 45 percent as close to US$45 million was set off against outstanding mining royalties from mining companies.

Salient features of economic recovery
Notwithstanding the significant headwinds facing the economy, there seems to be salient features of economic recovery in some sectors of the economy as taxes on domestic dividends and interest amounted to US$17 million from a target of US$15,2 million.
A number of companies managed to declare dividends, underlying positive performances in some economic sectors.

Also, the improvement in the availability of mortgage finance improved capital gains collections by more than 33 percent.
While a figure of US$12 million was budgeted for, collections were more than US$15,7 million in the period.
In addition, more than US$9,7 million was collected from the tobacco levy from a target of US$8,8 million.

Softening demand
But there are clear signs that demand is softening as domestic industrial activity continues declining.

Not surprisingly, only US$231 million accrued from VAT on local sales against a target of US$346 million.
Net VAT sales on local sales contributed 51 percent to total revenue and 13 percent to total revenue as both capacity utilisation in industry and disposable incomes declined.

Interestingly, VAT on imports exceeded the target by six percent to US$224,7 million as
economic agents “substituted local goods with imports that attract VAT”.

The Authorities believe that improved economic performance and, by extension, the country’s revenue generating capacity can only improve if there is a significant injection of liquidity in the economy.