By Tapiwanashe W Mangwiro.
HARARE – (News of The South) – Zimbabwe Revenue Authority (ZIMRA) for the fourth quarter running in 2019 has surpassed its revenue collection target, as it collected $11.7 million against a revenue target of $7.9 billion representing a +47.27% variance.
For a twelve month period revenue collected was 24.65% above target at $23.19billion.
VAT on both local and imported goods dominated the revenue charts as it ended the year with Z$2.9 billion, while the IMTT continued to be on a positive note due to the continued cash crisis in the country. Individual tax posted improved figures despite many tax threshold adjustment in the quarter due to the increased cushion allowances and the cost of living adjustments that were churned out in the quarter.
TAX 2019 Q4 ACTUAL COLLECTION 2018 Q4 ACTUAL COLLECTIONS YoY CHANGE 2019 Q4 TARGET COLLECTIONS TARGET VARIANCE
Individual Tax 1.7 0.2 750% 0.9 82.91%
Company Tax 1.6 0.1 1500% 1.1 47.35%
VAT 2.9 0.3 866.66% 1.9 52.6%
Customs Duty 0.9 0.1 800% 0.6 46.32%
Excise Duty 1.8 0.2 800% 1.4 25.87%
IMTT 0.9 0.1 1200% 0.1 23.08%
Mining Royalties 0.29 0.23 26.08% 0.23 14.59%
Year-on-Year growth across board was above annual inflation ranging from 750% to 1500% growth, as floating of the currency helped the growth figures. For duty paid in foreign currency and company tax as well as individual tax converted at the prevailing rate will result in more revenue than that paid for in local currency.
Unlike the previous two quarters Excise Duty led the contributor’s charts taking over from Value Added Tax as it was affected by many tax rebates as outlined by the finance minister Prof Mthuli Ncube in his mid-year fiscal policy review. Excise Duty contributed 16% as it was mainly driven by the foreign currency exchanged at the prevailing rate throughout the quarter.
Due to numerous salary hikes in the private sector the individual tax contributed a sizeable portion of 14%. This was due to employees moving into the next tax bracket the more their salaries were reviewed.
General inflation pressures caused the prices of goods and services to increase resulting in higher sales values and resultantly more VAT on local sales as it contributed 13%. High prices prevailing in the economy resulted in the positive performance of the revenue heads.
Year-on-Year net revenue for Q4 grew by 651.29% higher than the national inflation which was 521%, in nominal terms. In real terms net revenue collections during Quarter 4 of 2019 grew by 11.44% from the same period last year.
The net revenue to GDP ratio for the year 2019 stood at 18% against a regional average ratio of 15%1.
Net revenue to GDP ratio for 2019 was above the regional average ratio of 15% as ZIMRA recorded a ratio of 18%.
In the first half of the year 2020, we are going to continue collecting revenues that are more than the targeted due to increasing YoY inflation. Mom inflation eased in the previous quarter from a peak of 37.7% in October to 16.55% in December. It is the YoY inflation that has been on the rise in the same period from 480% in October to 521% in December that will cause ZIMRA to continue and surpass its revenue targets.
The biggest positive on the report is that the regulator registered 5 400 new Taxpayers during Q4 while cumulative registrations stood at 21 333 for the full year 2019, bringing the taxpayer base to 172 497 in total. This can also be attributed to the increase in revenue along with the increased compliance through implementation of a Compliance Management Programme.
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