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Walter Muchinguri : Assistant Business Editor
REVENUE collected by the Zimbabwe Revenue Authority for the first quarter of the year fell by 9,75 percent due to depressed economic activity, widening tax debt, non-compliance by taxpayers, corruption and lack of complete automation. Gross collections for the quarter amounted to $782 million while refunds, consisting of Value Added Tax (VAT) and Customs Duty, stood at $57,11 million, which resulted in net collections of $724,89 million.The net collections were 84,11 percent of the targeted $861,83 million resulting in a decline of 9,75 percent compared to Q1 2015.
Zimra board chairperson Mrs Willia Bonyongwe said the authority was struggling to restrain the tax debt which rose by 30,9 percent from $1,97 billion at the end of 2015 to $2,58 billion by the end of Q1 (2016).
“It is noteworthy that the breakdown of this debt is 0,18 percent Government, 26,77 percent Municipalities, Parastatals and State-owned entities, and 73,05 percent private entities.
“The debt is composed of 53,12 percent principal, 20,23 percent penalty and 26,65 percent interest,” she said in the revenue collection report for the quarter.
She also noted that some taxpayers were not paying their tax in full, and others do not pay their tax at all, which would be partly resolved through full automation that is underway.
“Zimra will in Q2 (2016) enhance measures to improve taxpayer compliance. It will also soon complete the fiscalisation process it started in 2010. The old fiscal gadgets are being linked to the new and versatile Tax Management System (TMS). The TMS is being rolled out fast.
“This is a smart system which collects an incredible variety of information about transactions and taxpayers. Already, the system has revealed some interesting insights about taxpayers, including gross understatement in the returns to ZIMRA.
“The system has also revealed a lot of businesses that have hitherto been operating outside the tax net. The reality now is that as long as one is trading in Zimbabwe, as the roll out continues, it will be impossible to hide from ZIMRA. Therefore, the prudent thing to do is for all taxpayers to regularise their businesses with ZIMRA,” she said.
Individual tax continued to contribute the most to revenue collected during the period under review at 23,10 percent followed by Excise Duty (22,13 percent), VAT on local sales (18,08 percent) and VAT on imports (11,55 percent).
Individual tax collection amounted to $167,43 million, which was 85,42 percent of the targeted $196 million and 16,36 percent lower than the $200,18 million that was collected in Q1 (2015).
Mrs Bonyongwe said this was a reflection of the impact of job losses and also pay cuts for those still in their jobs as companies struggle to survive.
“A number of companies no longer have bonus payments which are normally paid during Q1 when the annual performance is finalised.
“The Pay as You Earn (PAYE) debt as at the end of Q1 (2016) stood at $692,86 million, up from $578,78 million as at end of Q1 (2015). This largely reflects incapacity to pay on some companies, some of which may no longer be operational.
“In the short term, this tax head will remain under pressure and performance is not expected to improve, all things remaining equal,” she said.
Revenue from Excise Duty amounted to $160,45 million, which was 89,59 percent of the targeted $179,08 million and a decrease of 2,99 percent from the $165,40 million collected in Q1 (2015).
Excise Duty on fuel was the main contributor to the revenue head with a contribution of 79,35 percent.
Excise Duty on beer and airtime contributed 8,92 percent and 6,09 percent respectively, with the remainder of the revenue coming from Excise Duty on tobacco, wines and spirits, second-hand motor vehicles and electric lamps.
Gross collection from VAT on local sales collections rose by $187,89 million, which were reduced by refunds amounting to $56,79 million resulting in net revenue of $131,10 million.
VAT on imports collection at $83,69 million were almost on target as they were 99,52 percent of the targeted $84,10 million.
Mrs Bonyongwe said the decline could also indicate a certain level of transit fraud.
“To mitigate this risk, ZIMRA will launch a Cargo Tracking System to curb transit fraud by the end of June 2016,” she said.
Online Reporter