Zimra warns of company closures

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THE Zimbabwe Revenue Authority (Zimra) has warned of more company closures, scaling down of operations and a subsequent decline in company tax as Treasury continues to operate under tight fiscal space, the authority has announced.

BY BERNARD MPOFU
ACTING BUSINESS EDITOR

Treasury last year missed its revenue target for the year ending December 2013 by 8% on the back of underperformance of diamond revenue and massive company closures amid a relentless push by the civil service to increase the wage bill.

Last December, Finance minister Patrick Chinamasa presented a $4,1 billion budget.

According to year-end figures released by the tax collector yesterday, total net-of-refunds collections for the year 2013 amounted to $3,43 billion against a target of $3,64 billion resulting in a negative variance of 6%.

The year 2013 saw a number of companies scaling down operations and others closing shop resulting in government collecting $401 million in company tax from a target of $457,4 million.

During the year under review, capacity utilisation for the manufacturing sector dropped to 39,6% from 44,6% in 2012.

“The revenue head (company tax) is expected to drop significantly in 2014 if the current environment persists as more companies are likely to scale down operations,” Zimra chairman Sternford Moyo said.

He said the repeal of the deductibility of mineral royalties as an allowable deduction would, however, have a slight positive impact on corporate tax collected.

The fourth quarter of 2013, according to Moyo, brought in net collections of $877,6 million against the Finance ministry’s target of $1,1 billion resulting in a negative variance of 18%.

“The year 2013 was characterised by many challenges that created a very difficult environment for businesses and consequently for revenue collection.

Challenges such as the liquidity crunch coupled with low industrial capacity utilisation, among others, saw the tax base shrinking,” Moyo said.

The figures come at a time the civil service has reportedly struck a salary increment deal with government, a development that will limit fiscal space.
Already, the civil service wage bill accounts for 75% of total revenue, crowding out key capital projects.

“Mining royalties amounted to $133,7 million against a target of $245 million resulting in a negative variance of 45%. The performance of the revenue head was due to the challenges that the government of Zimbabwe faced in auctioning diamonds on the international market during the greater part of 2013,” Moyo said.

He added that tax on domestic dividend and interest was this year not expected to contribute much due to the slowdown in economic growth.

Turning to tobacco levy, cumulative collections amounted to $9,9 million against a target of $10 million.

“The performance of the tobacco levy can be attributed to the drop in prices which were encountered during the tobacco selling season,” Moyo said.

13 COMMENTS

  1. The government is a victim of its own actions. Why employ so many soldiers, the country is not under any threat? The policeman(or policewoman) to non policeperson ratio used to be 1:500 implying that we should be having about 26 000 policemen given our 13 million population, but we happen to have much more than 26 000.

      • check Harare Drive near the Pomona Stone quarry and Domboshava Roads where they know the most high profile people will have gone past the Hellensvale Shops, these cops pretent to be professional, half the time they do not reason, they do not use discretion. I have yet to see a country heavily regulated like Zimbabwe where citizens & later on non citizens have phobia even to drive a new car on the road! God intervene, please

  2. The tax collector is greedy, Zacheausly collecting hard earned money from companies by misrepresenting interpretation of the law to clients. if you dont know the tax laws unonyura big time.

  3. A few short years ago Mauritius went around the problem by reducing the tax rates and in the process they were pleasantly surprised with the number of people stepping forward to declare their taxes and with it companies started hiring more people increasing the tax base. This idea of ‘ndinoda ku mufiksa’ has entered the national psyche and here begins a sorry tale.

  4. They have ears but they don’t hear, they have eyes but they don’t see. Seriously what the hell do they think they are doing to the country. Isn’t it that those benefitting from this filthy lucre are the ones supporting indigenisation but the country is going down on its knees. One kid told me he was hungry, i gave him buns and he threw them away, why he wanted money, this is exactly what zanupf wants, things done only their way and we all know their way is very wrong and nobody wants to sleep in this pig sty. Ask workers who have lost jobs due to this policy if they are happy with this policy?

  5. The animal known as Zanupf is not worried about your poverty, problems, welfare, or whether you are employed or not. All that they need are votes to win an election. So even if a strategy to win elections will result in you all being poor, it is a good strategy in the eyes of Zanupf. This explains why Zanupf uses populist policies even if they ruin the economy. They do NOT care. They very well know that their indegenisation policy will cause liquidity problems in the country and company closures. But as long as that policy is capable of fooling the largely ignorant majority into believing that they will get riches and monies for free from indegenised companies, then Zanupf will know that such gullible people will vote for it. Therefore Zimra must stop complaining because what is happening is just an obvious sequel of unintelligent policies of indegenisation being peddled by Zanupf. Suppose you are starving at your homestead, and someone is sympathetic and wants to bring food so that you share with him. But then you the starving person tells the good Samaritan that “if you bring your food here, I will eat 51% of it, and you just take 49% – infact I’m thinking of increasing my share of your food to 60%”. This is what Zanupf is saying in its indegenisation policy. And I wonder which country Zanu thinks is laden with fools who have money and can bring it here for Zimbabwe to share in terms of proportions mentioned above. I wonder what makes them think the whole world is full of people whose thinking is abysmally moronic and strikingly similar to that of residents of Maramba-Pfungwe. But look, if a leadership can believe that purified diesel oozes from a rock, then such beliefs are expected, and only evolution needs to be blamed for not having done a thorough job in the animal known as Zanupf.

  6. I suggest Sternford Moyo & Pasi do something about the corruption at the border posts especially Beitbridge & they will see their coffers increase. Worst of all these corrupt people are getting this money tax free so Zimra IS DOUBLY disadvantaged. The ‘jongwe’ has certainly come home to roost.

    • No do not blame the zimra officials doing their job. They are also victims in this scenario because their employer is refusing them salary increments and bonuses, yet they collect the cash for the employer. Obviously they also get the temptation.

      • So Collin,it appears you feel not being paid a bonus or being given an increment is licence to be corrupt. We shouldn’t condone any form of dishonesty if our country is ever to climb out of the quagmire we are in. Are these the values you would teach your children or family members? We all are tempted daily in many different ways but decent honest people resist.

  7. sometimes we need to understand that if there is no employment there is no income circulation. Bulawayo industries have shrinked out of business mainly due to Zim-US dollar transition affect with high pre inflaction rates and recent high interest rate. Business is under hask conditions with Zimra charging high vat.

    Secondly if Zimra wants to make sustainable income they should reduce imports as they are killing the industry since they cash leakages meaning money is circulating outside the country and we are left with products to sell. Our gvt has ignored this on the otherhand since Vat is high @ 15% it means every cost will rise from service providers for rent nd utility rates etc will rise.

    Thirdly if notice all these factors have cause a liquidty crises with our gvt failing to rescue our Bulawayo industry. I believe sometimes its good to separate our political differences and work for the good cause because at the end of the we are Zimbabweans.

  8. Mugabe and his colleagues continue to behave like those human like creatures called Baboons when they set upon an unguarded crop. They destroy whatever is in the way, running amok, cheering one another as they loot and feed. They have no sense of future.

    It is this baboon mentality which now holds Mugabe and his party captive in a country which they ought to be living heroes having squandered years of opportunities to make Zimbabwe a success story.

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