THE Zimbabwe Revenue Authority (Zimra) says second quarter collections will be adversely affected by business closures and reduced profitability due to the impact of the COVID-19 pandemic.
BY TATIRA ZWINOIRA
In the first quarter ended March 31, 2020 before the start of the national lockdown, Zimra surpassed its cumulative net revenue collections by 10,42% to $13.88 billion against a target of $12.57 billion.
However, following the COVID-19 national lockdown and trade restrictions within major export destinations, second quarter revenue collections are expected to drop with the economy expected to contract by 7,4% this year.
“The key challenges faced by the authority in the second quarter are largely related to the COVID- 19 pandemic that will result in closure of some businesses, reduced profitability, employee layoffs, reduced trade and locked tourism,” said Zimra vice-chairman Josephine Matambo in the taxman’s first quarter report.
“Overall, the COVID-19 pandemic is expected to severely affect business operations and consumption, resulting in reduced revenues at a time the government is in dire need of funding to fight the pandemic and provide the necessary social support nets for its citizens.”
She said the global economy was facing an imminent recession due to the COVID-19 pandemic whose impact on business will affect revenue collections.’
Business membership organisations such as Confederation of Zimbabwe Industries and the Zimbabwe National Chamber of Commerce have released reports confirming that business closures due to COVID-19 were inevitable.
COVID-19 restrictions have effectively cut domestic and foreign revenue streams for most companies which will affect their ability to pay taxes.
Treasury has so far only allowed for the suspension of duties on COVID-19 essential goods and instructed Zimra to expedite VAT and corporate tax refunds.
“Some of the negative effects of the pandemic will be felt immediately, while others will be long term. Combating COVID-19 has inevitably resulted in more financial resources being spent directly towards health services to respond to the disaster and towards cushioning industry, workers, consumers and vulnerable persons from its devastating effects,” Matambo said.
“Support from some local and international companies, as well as multilateral and bilateral partners, has complemented to the achievement of fiscal revenue collected by Zimra.”
Major contributors to net revenue collections in the first quarter were individuals at 17%, excise duty (16%), companies and VAT on local sales both contributed (14%), and VAT on imports (11%).