Zimra smiles to the bank: Surpasses January 2017 revenue target

Zimra

Oliver Kazunga, Senior Business Reporter
THE Zimbabwe Revenue Authority (Zimra) has surpassed gross and net revenue targets for January 2017 by over four percent and three percent respectively against a target of $254,10 million.

Zimra head of corporate communications Mr Canisio Mudzimu said yesterday that the “sterling” performance was driven by contributions from Value Added Tax (VAT) on local sales.

“The authority collected gross and net revenue amounting to $264.79 million and $262.21 million respectively, against a target of $254.10 million. This translates to a growth in net revenue of over 13 percent when compared to the $232.01 million, which was collected during the same period last year,” he said in a statement.

“The sterling performance was mainly driven by contributions from Value Added Tax (VAT) on local sales, which were 41 percent above target with total net collections of $76.90 million.”

Mr Mudzimu said increased consumption of goods, which attract VAT during the festive season, coupled with use of plastic money and the ongoing fiscalisation project whose aim is to plug revenue leakages, saw gross VAT revenue rising by $13 million from the $66 million collected in January 2016.

The VAT refunds bill also plummeted to $2.57 million in January this year compared to the $14.59 million paid out during the same period last year due to intensified audits and verifications.

“The improved performance by Zimra comes at a time when the authority has embarked on a massive exercise to curb illegal and underground activities such as tax evasion, smuggling, transfer pricing and corruption in order to enhance revenue collections.

“The numerous strategies to grow revenue — which include extension of fiscalisation to all VAT registered operators, cargo tracking, automation, enhanced audit and investigation activities, information dissemination, and negotiation with taxpayers for payment terms, among others are beginning to bear fruit as evidenced by January revenue collection figures,” he said.

The Government has effected a 15 percent Value Added Tax on previously zero rated items, a development likely to see consumers bearing the tax burden.

In the 2017 national budget, Finance and Economic Development Minister Patrick Chinamasa proposed to introduce a 15 percent VAT on rice, margarine, cereals, maheu, pork, beef, fish, chicken and potatoes.

On Wednesday, Minister Chinamasa effected Statutory Instrument 20 of 2017 that aims at increasing government’s revenue base as previously VAT zero rated items have now been moved to standard rating.

As a result of VAT exemption previously, prices of the above-mentioned basic commodities were relatively cheap and affordable to low income earners.

In an interview, Confederation of Zimbabwe Retailers (CZR) president Mr Danford Mutashu yesterday said moving the items from zero-rating to standard rating means that prices of goods will increase as retailers will factor in the VAT component.

“The introduction of the 15 percent VAT on previously zero-rated items should be looked at from both sides.

“The imposition of the 15 percent VAT will obviously improve the country’s revenue base looking at the situation where the Government is coming from.

The Government needs revenue to implement various programmes but because of the economic climate prevailing, the collections have been very low,” he said.

Mr Mutashu noted that aggregate demand has been contracting owing to low disposable income among other economic challenges obtaining in the country.

Against this background, he said, the Government was supposed to consult different stakeholders before imposing the 15 percent VAT on previous zero rated items.

“Ultimately, what it means is that businesses will hike prices and the cost is passed onto the final consumer of the product. For us to survive, we rely on consumers and if they are burdened it means sales turnover will go down,” he said.

Last year, the Government missed its revenue collection target by four percent at $3,46 billion below the targeted $3,6 billion with Zimra blaming the negative performance to unwillingness by tax agents to meet obligations.

— @okazunga.

Article Source: The Chronicle