BY TATIRA ZWINOIRA
INDIVIDUAL and company taxes dominated the taxman’s first quarter revenue collections of $88,26 billion, contributing 17,89% and 19,98%, respectively, a sign that the struggling citizenry and businesses will be under more pressure going forward.
Net and gross revenue collections were ahead of the set target of $86,52 billion by 2,01% and 4,73%, respectively, coming in at $88,26 billion and $90,61 billion.
The increase in revenue from individual and company tax is a result of Treasury increasing taxes in the 2021 National Budget.
These increases were significant on presumptive taxes, taxes on small-to-medium enterprises and a demand that companies earning foreign currency pay their taxes in that medium of exchange on top of liquidating a portion of foreign currency income.
In a statement accompanying the Zimbabwe Revenue’s Authority (Zimra)’s revenue collections for the first quarter ending March 31 2021, vice-chairperson Josephine Matambo indicated that they would be enhancing revenue collections going forward.
“Zimra will continue intensifying automation of processes and improving the delivery of online services. Revenue collections are expected to remain positive in light of the various revenue enhancement initiatives Zimra has initiated, especially the drive to tap into the digital economy, which has been growing tremendously,” she said.
With net customs and excise duty down by 1,8% and 10,25% to $6,23 billion and $11,04 billion, respectively, from targets of $6,35 billion and $12,3 billion, more concentration is now on company and individual taxes.
Net VAT on sales, another head traditionally higher than individual and company taxes, also missed its target by 20,71% with actual collections of nearly $11,9 billion. Zimra blamed this on the lockdown in January 2021 which reduced the consumption of individuals and corporates.
She said the foreign currency auction system introduced in June last year had helped companies to keep afloat.
“The foreign currency auction system has assisted industry to maintain or expand operations as companies were able to acquire raw materials at official exchange rates. Extra efforts made by Zimra to carry out compliance enforcement programmes in the difficult circumstances enhanced revenue collections for the first Quarterly Payment Date (QPD),” Matambo said.
“Relaxation of lockdown restrictions late into the quarter assisted companies to increase productivity, which resulted in improved revenue collections.”
Matambo noted that most employers continued adjusting salaries and wages upwards in line with the increasing cost of living at the beginning of the quarter.
“The continuous salary adjustments and cost of living adjustments enhanced individual nominal income resulting in the positive performance of this tax head,” she said
She said there had been a drop in customs and excise duty due to decreased traffic at the country’s borders as a result of the COVID-19-induced lockdowns.
“These two revenue heads performed below the set targets because of the lockdowns. The closure of ports of entry to the general public with the exception of trucks bringing in essential commodities affected revenue collections significantly,” Matambo said.
“Some traders opted to use undesignated crossing points where they were smuggling goods that were liable for duty payment. As for excise duty, though the consumption of beer and wines was not affected, revenue collected from petroleum products declined as most companies had to close shop or maintain minimal operations.”
Matambo said Zimra expects that an improvement in the stabilisation of the exchange rate due to the forex auction system will generate confidence in the economy and stabilise it.
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