Gross collections for the year 2012 amounted to $US3.454 billion, against a target of US$3.233 billion, giving a positive variance. The last quarter of the year 2012 saw revenue inflows improving significantly, with the month of December recording the highest net collections of $US414.58 million.
Value added tax recorded the highest contribution of 33% to total revenue collections. VAT collections were $1.083 billion, against a target of $1.085 billion, giving a small negative variance of less than 1%. Audits, follows ups and investigations done by the Authority, which have improved compliance levels of clients, were responsible for the performance of this revenue head. Individual taxes contributed $686.4 million, against a target of $645 million, giving a rise to a positive variance of 6%. This variance can be attributed to enhanced measures employed by the Authority, as well as the performance awards and salary increments that were awarded by some companies.
Company taxes contributed 14% of total revenue. Collections from companies during the year under review stood at $442.7 million, against a target of $415 million, resulting in a positive variance of 7 percent. The positive variance of this revenue head can be attributed to recapitalisation by some large companies which resulted in improved profitability, fiscalisation, as well as Audit and investigation activities conducted. VAT was however negatively affected by huge refunds claimed by the Authority’s clients, as well as the fall in industrial capacity utilisation, from 57.3 percent in 2011 to 44.3 percent in 2012.
Customs duty contributed 11 percent to total revenue with collections of $354.2 million, against a target of $376.9 million, giving a negative variance of 6 percent. According to ZIMRA, actual revenue collections were negatively impacted by tax expenditure regime which includes rebates and duties under bilateral arrangements. However, corruption at the border posts is also responsible for the underperformance of this revenue head. In its end of year report, the Parliamentary Committee on Budget and Finance argued that customs duty collections should be the highest revenue contributor, contributing about $2.5 billion. This is because imports closed the year at $8 billion, and the average import duty rate is 35 percent. Illegal activities at border posts which compromise customs duty collections include bribery of customs officials, false and under-declarations, abuse of Certificates of Origin, use of undesignated entry or exit points and abuse of Business Partnership Numbers and travellers’ rebate.
Excise duty contributed 12 percent to total revenue for the year 2012, with collections of $394.1 million, against a target of $385.9 million, giving a positive variance 2%. Fuel contributed 69 percent while beer contributed 22 percent, with the remainder coming from tobacco, wines and spirit as well as second hand motor vehicles. In his 2012 midterm fiscal policy review, the minister increased excised duty on tobacco and alcohol, which may also have contributed to the positive performance of this revenue head. Lastly, mining royalties were 5 percent above target, after contributing $136.9 million, against a target of $130.1 million.
Post published in: Business