×
NewsDay

AMH is an independent media house free from political ties or outside influence. We have four newspapers: The Zimbabwe Independent, a business weekly published every Friday, The Standard, a weekly published every Sunday, and Southern and NewsDay, our daily newspapers. Each has an online edition.

Zimra sees VAT doubling on automation

Business
THE Zimbabwe Revenue Authority (Zimra) expects valued-added tax (VAT) contribution to total revenue doubling to 34% at the end of this month on the back of further automation of the payment system.

THE Zimbabwe Revenue Authority (Zimra) expects valued-added tax (VAT) contribution to total revenue doubling to 34% at the end of this month on the back of further automation of the payment system.

BY TATIRA ZWINOIRA

The expected increase in revenue contribution by VAT comes as a recent United Nations Capital Development Fund (UNCDF) study showed that digitisation of VAT could significantly increase revenues.

Zimra chairperson Willia Bonyongwe told NewsDay in an interview yesterday that the impact of automating or digitising payments would be most pronounced on VAT.

“It [impact of automation] is 17% from the first quarter and we expect it to be double that at the end of this month. If we continue with this momentum, then by year end, we could double our VAT on local sales. We have leakages because of using semi-automated systems and we, indeed, need full automation to plug the serious revenue leakages we are facing as emerging markets,” she said.

“The first thing is to agree with the UN report that, as Zimbabwe, we are lagging behind some of our counterparts in many respects.

“However, in the past few years, some ground was partially covered, although we still face a lot of leakages as Zimbabwe. Digitisation will help Zimra increase revenues and one of the specific mandates for this board is to accelerate automation in the form of completing the fiscalisation project.”

She said, for example, when the tax management system was implemented it netted many people who were evading tax, all tax heads who would not pay PAYE [pay-as-you-earn] and VAT, among, others showing advantages of digitisation of payments.

“We are working flat out to increase the number of operators on fiscal devices and on the tax management system,” Bonyongwe said.

The study by UNCDF stated that shifting from cash to electronic payments could provide a pathway to a broader range of financial services.

Additionally, it found that electronic payments provided cost savings and transparency for governments, development organisations and private sector players.

Currently, UNCDF is running an awareness campaign under the “Better Than Cash Alliance” banner, which seeks to get countries to increase digitisation of payment systems.

In a recent statement, UNCDF said further expanding digitisation of payments could fast-track a country’s economic modernisation, while digitising VAT can increase revenues.

In his mid-term fiscal policy review statement, Finance minister Patrick Chinamasa said Zimra had increased debt collection efforts through the implementation of client-tailored payment plans, appointment of agents, debt set offs, among others.

He said the result was a recovery of $326,53 million during the first half of 2016.

Other initiatives set out in the mid-term fiscal review include the VAT fiscalisation recording of taxable transactions in order to create an interface between taxpayers’ fiscal devices and the Zimra platform so as to enable real time monitoring of transactions by Zimra.

In the first half of the year, net revenue collections declined to $1,55 billion, compared to $1,66 billion over the same period in 2015.