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Acting Business Editor
THE Zimbabwe Revenue Authority (Zimra) missed its net revenue target for 2013 and blamed liquidity challenges, power cuts and scaling down of operations by companies for the below par performance.Zimra collected $3,43 billion in net revenue against a target of $3,64 billion showing a six percent negative variance.
The authority’s chairman, Sternford Moyo, said the low revenue base was being caused by liquidity crunch coupled with low industrial capacity utilisation.
He said the fourth quarter of 2013 brought in net collections of $877,6 million against the Ministry of Finance and Economic Development’s target of $1,1 billion resulting in a negative variance of 18 percent.
In the fourth quarter, Moyo said most of the revenue was realised from Pay As You Earn (PAYE), which accounted for $185,2 million followed by excise duty contributing $138,1 million while Value Added Tax on imports contributed $130,1 million.
In 2013, he said individual tax (PAYE) contributed the bulk of revenue (22 percent of total revenue) while VAT on local sales contributed 16 percent. Excise duty contributed 15 percent to total revenue.
“Collections under PAYE amounted to $740,3 million against a target of $685,0 million resulting in a positive variance eight percent.”
Moyo attributed the performance of revenue head among others to companies that managed to give bonuses and performance awards to their employees during the year, salary increments offered to employees by companies during the year, improved compliance as a result of audits and follow ups undertaken by Zimra.
He said the PAYE’s revenue head collections may slightly improve in 2014 because of the proposal to tax monthly income above $20,000 at a flat rate of 50 percent.
However, Moyo said retrenchments and company closures may negatively affect future flows of revenue under the PAYE revenue head.
Moyo said company tax amounted to $401,1 million against a target of $457,4 million resulting in a negative variance of 12 percent.
The negative performance of the revenue head, he said could be attributed to factors that include reduction in industrial capacity utilisation from about 44,6 percent in 2012 to 39,6 percent last year.
The general economic slump, which limited the expansion of business towards income generation can be attributed to the performance of company tax.
“The revenue head is expected to drop significantly in 2014 if the current environment persists as more companies are likely to scale down operations.
The repeal of the deductibility of mineral royalties as an allowable deduction will have a slight positive impact on corporate tax collected,” he said.
Collections under the domestic dividends and interest were $28,5 million against a target of $95,1 million resulting in a 70 percent negative variance.
The poor performance of the revenue head can be attributed to the reduction in local industrial capacity utilisation and profitability among other fundamentals.
Moyo said the domestic dividends and interest tax was not expected to contribute much in 2014 due to persistent challenges that slow down economic growth.
Capital gains tax and capital gains withholding tax realised $22,5 million against a target of $19,2 million resulting in a positive variance of 18 percent.
“The performance of the revenue head can be attributed to the activity in the property sector as some banks have been availing mortgage loans to purchase properties during the year, though at a low scale,” he said adding that the revenue head was expected to slightly improve owing to recent pronouncement in the 2014 national budget that the property buyers who change ownership through cessions will be liable to pay capital gains tax.
VAT gross collections for 2013 were $1,20 billion against a target of $1,16 billion resulting in appositive variance of three percent.
“Collections for other revenue heads were $114,67 million against a target of $58,80 million resulting in a positive variance of 95 percent. Withholding eleven taxes on tenders was the main contributor towards this head (contributed 85 percent of revenue under other taxes),” said Moyo.
Online Reporter