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NewsDay

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VAT, PAYE propel Zimra revenues

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Improved performance of value added tax (VAT) and pay as you earn (PAYE) propelled the Zimbabwe Revenue Authority (Zimra) to attain gross collections of $2,8 billion, in the process surpassing its yearly target of $2,5 billion. Net collections amounted to $2,6 billion against a target of $2,5 billion. VAT contributed 40% towards total collections. Collections […]

Improved performance of value added tax (VAT) and pay as you earn (PAYE) propelled the Zimbabwe Revenue Authority (Zimra) to attain gross collections of $2,8 billion, in the process surpassing its yearly target of $2,5 billion.

Net collections amounted to $2,6 billion against a target of $2,5 billion.

VAT contributed 40% towards total collections. Collections amounted to $1,1 billion against a target of $990 million, resulting in a 10% positive variance.

Collections under individual tax exceeded the $480 million target by 22% after topping $588 million.

Customs duty was third contributing 12%, followed by company tax and excise duty, which both contributed 11%.

“The performance of this revenue head (VAT) can be attributed to improved information dissemination, audits and follow-ups done by the authority, which have improved compliance levels,” said Zimra board chairman Sternford Moyo in his 2011 revenue performance report.

“In addition, capacity utilisation for the local industry has been gradually improving, hence the enhanced performance of VAT on local sales”

Moyo, however, said despite the improved capacity utilisation by local industry this could not satisfy demand for the economy necessitating supplement from imports resulting in improved collections under import VAT.

He said revenue inflows improved significantly towards the end of the year

The positive performance of individual tax was attributed to companies which increased salaries and awarded bonuses and performance awards to employees during 2011.

Several companies that had shelved operations resumed them during the course of the year as a result of the gradual improvement in the economic environment. This had the effect of widening the tax base.

Moyo noted the rise in capacity utilisation led some companies into hiring additional employees whilst others rehired some of their former employees who had been retrenched. This resulted in more people contributing to the collections of individual tax.

Companies contributed 10% above target after $296,6 million was collected against a target of $270 million. Some companies managed to increase productivity during the year therefore their profitability also improved.

Moyo said the anticipated ban on importation of second-hand motor vehicles older than five years accelerated customs duty collections as members of the public rushed to import such vehicles before the deadline.

A total of $334 million was collected against a target of $325 million, leading to a 3% positive variance.