Zimra surpasses Q1 revenue collection targets by 6.09%
HARARE – Zimbabwe Revenue Authority exceeded its first quarter revenue collection targets by 6.09 percent, with actual gross collections amounting to $862.47 million against a target of $812.94 million.
Net revenue grew from $724.89 million in the same period in 2016 to $826.63 million in 2017, which represents a 14.04 percent growth. Gross revenue collections in 2017 were 10.29 percent above the 2016 gross revenue collections.
Zimra chairperson, Willie Bonyongwe, said the Q1 performance was satisfactory and very encouraging and sets the right tone for what the Authority needs to achieve throughout the year.
“The depressed economy presented a significant challenge to revenue mobilization, but ZIMRA rose to the challenge, creating a strong foundation in systems development, revenue enhancement and compliance measures. That the targets were exceeded shows what a determined people can achieve,” she said.
The bulk of the revenues in Q1 were from Value Added Tax on Local Sales (22.42%), Individual Tax (20.05%) and Excise Duty (18.17%) while Company Tax contributed 11.20%, with the rest of the revenue heads contributed 28.16%.
Refunds amounted to $35.84 million giving $826.63 million in net collections, or 1.68% above target. Net revenue grew by 14.04 percent from $724.89million in Q1 prior year on the back of battery of revenue enhancement measures implemented by the Zimra which include automation, greater enforcement and the fight against corruption.
The individual taxes revenue head contributed $165.83 million, which is 89.54% of the targeted $185.21 million while collections were 0.95% below the US$167.43 million collected in Q1 2016.
“The performance was mainly affected by salary cuts and retrenchments. If we all pay our taxes, it becomes possible to reduce the tax rate. It is unfair that currently only a few people carry the tax burden whilst the majority who are self-employed and probably earning more are evading tax.” said Bonyongwe.
During Q1, the Authority embarked on an extensive taxpayer registration programme which includes intensive taxpayer education and client engagements, particularly in the SMEs sector, a programme which is expected to continue into Q2 and beyond and is designed to widen the tax base and share the tax burden by improving tax compliance levels.
A total of US$92.64 million was realized in Q1 through corporate income tax which was 25.19% above the target figure of $74.00 million while actual collections grew by 76.28% from Q1 prior year collections of $52.55 million.
“The Corporate Income Tax debt increased by 12.75% from US$751.49 million to US$847.33 million during the period under review. The increase in debt is due to enhanced audits, which result in prior year assessments being raised,” said Bonyongwe.
The performance of the tax head is attributed to the revenue enhancement measures as well as improvements in company profitability and payment of the first installment under QPDs in March 2017. In the outlook this tax head is expected to perform well owing to the expected improvement of the economy in general, though the liquidity problem will limit the growth.
During Q1 Gross VAT on Local Sales collections of $220.88 million were realized, indicating a growth of 17.56% from the US$187.89 million collected in Q1 prior year.
The gross collections under this revenue head were 34.77% above the set quarterly target of $163.90 million. However, net collections amounted to $185.36 million after refunds amounting to $35.52 million.
The net revenue in Q1 was 41.40% above the Q1 (2016), and 13.09% above the set target.
“This positive performance should form the nucleus of a new incremental trend in revenue collection in response to the Authority’s measures to enforce compliance and improve efficiency. This is in addition to the moves to plug all the tax leakages in the economy in the short to medium term. ZIMRA has been flushing out a number of fraudulent claims. In the long run, the economy has to be fixed sustainably in order to keep increasing revenue collections.” she said.
At the end of Q1 VAT debt amounted to $1.01billion, which is 0.71% lower than the $1.02 billion reported at the end of Q4 2016
Revenue foregone amounted to US$152.69 million from exempt goods and US$377.78 million from zero-rated supplies. There is, however, a current conversation to remove some items from the zero-rated to exempt category in order to reduce the loss of revenue outflows.
Vat on imports during the period under review amounted to $85.55 million, which exceeded by 1.72% the set target of $84.10 million, while revenue grew by 2.21% when compared to Q1 prior year. The performance of this revenue head has been positive, mostly because of an increase in VAT paying imports due to shortages in the local economy.
“Companies have been importing raw materials and machinery for their production lines as well as goods for wholesale and retail. This performance may not be sustainable in the future if the foreign currency shortages and delays in the processing of import payments continue to prevail,” said Bonyongwe.
Gross Customs Duty collections contributed $66.10 million during Q1 and net collections amounted to $66.04 million. While net revenue collections declined by 2.41% from $67.67 million collected in Q1 prior year and were 6.69% below the set target of $70.78 million.
Bonyongwe said the performance of Customs Duty has been dampened by regional trade agreements and continuous base erosion resulting from Customs Duty tax expenditures, which amounted to $131.40 million during Q1.
Revenue from Excise Duty amounted to $150.29 million during Q1 prior yaer , which is 92.40% of the target figure of $162.64 million.
The revenue head declined by 6.33% compared to $160.45 million collected in Q1 2016.
Meanwhile mining revenue collections amounted to $16.39 million, exceeding the set target of $13.50 million by 21.42% compared to $13.40 million collected in Q1 of 2016 while dividends, fees, interest and remittances contributed $13.28 million, which is 94.09% of the target figure of $14.11 million but a 9.78% decline from $14.71 million in Q1 of 2016