F15 revenue collection at US$3,5 billion in line with revised target
ZIMBABWE’S net revenue collections for 2015 declined three percent to US$3,5 billion moving further away from the key US$4 billion mark as the tax base continues to shrink in line with a challenging economic environment.
The collections, which are 25 percent of the forecast 2015 GDP of US$13,89 billion, were just in line with the revised target of US$3,46 billion but below the initial target of US$3,76 billion.
The collections would have also shown an improvement (to US$3,62 billion) were it not for retrospective refunding of mining royalties emanating from a court order, and change of Income Tax policy measures on a major construction project amounting to US$123,53 million.
According to the Zimbabwe Revenue Authority (ZIMRA) performance update for the fourth quarter, revenue was realised largely from Individual Tax [which contributed 22%], Excise Duty [20%], VAT on Local Sales [16%], VAT on Imports [13%], Company Tax [12%], and Customs Duty [10%].
ZIMRA notes that the level of distress within the tax paying community continues to rise as there was an increase in amounts owed to $1.97 billion (incorporating recoveries and new debts) from $1.38 billion.
“This does not reflect inability to collect by ZIMRA which has been engaging the debtors. Instead, the rise in this figure reveals the level of distress within the tax paying community.”
The major revenue heads that surpassed their targets were Excise Duty [21.05%], VAT on Imports [7.50%], Carbon Tax [17.88%] and Withholding Tax on Dividends, Fees, Interest & Remittances (DFIR) [2.14%]. However Individual Tax [-6.85%], Customs Duty [-13.55%], VAT on Local Sales [-14.67%], Withholding Tax on Contracts [-28.48%], Mining Royalties [-113.30%], Company Tax [- 5.20%] and Other Taxes [-35.60%] missed their targets in 2015.
Tax on company and business profits contributed $424.68 million to total revenue during the year under review. This was 95% of target of $448 million, and was up 14% from $373.99 million recorded in 2014. Meanwhile, revenues from Excise Duty amounted to $714.22 million which is 121% of the target of the $590 million.
Excise duty on fuel was the biggest contributor to Excise Duty revenue, with a contribution of 78%. This revenue head`s performance can be attributed to the increase in Excise Duty rates for petrol and diesel at the beginning of the year, as well as the high consumption of fuel products during the year. However, in 2016, performance is forecast to be lower due to declining oil prices on the international market.
Gross Mining Royalties stood at $82.13 million in 2015, which constituted a 110% decline from the $191.66 million collected in 2014. A court ruling which resulted in a $101.55 million refund, which was processed in Q4, adversely affected this tax head`s performance. This year`s performance will largely be dependent on international metal prices, production levels as well as government policy.
ZIMRA said that it is working on a comprehensive tax management system to increase the efficiency and cost of collecting, while simultaneously increasing revenue collections, through plugging leakages. This tax management system is scheduled to be fully operational by the end of 2016. Cargo tracking is also expected to be introduced this year.
Gross collections for the fourth quarter were $1.12 billion. Refunds – which consist of Value Added Tax, Mining Royalties and Customs Duty – stood at $162.10 million, resulting in net collections of US$959.07 million. The net collections translated to 92% of the quarterly target of US$1.038 billion. There was a 3.8% decline in net revenue collections in the fourth quarter of 2015, compared to the same period in 2014. FinX
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