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Company profits spur State revenues

26 Apr, 2019 - 11:04 0 Views
Company profits spur State revenues ZIMRA chairman Callisto Jokonya

eBusiness Weekly

Africa Moyo
Corporates continue to wave a fist of defiance and are posting reasonable profits despite the prevailing economic challenges, resulting in company tax collections by the Zimbabwe Revenue Authority (Zimra) rising by 88,31 percent in the first quarter of 2019, compared to the same period last year.

Company tax (corporate income tax) generated $242,08 million against a target of $172 million, representing a positive variance of 40,74 percent.

In a revenue performance report for the quarter ended March 31, 2019, Zimra board chairman Callisto Jokonya said: “Collections grew by 88,31 percent from $128,55 million collected in the same period in 2018.

“Major factors to the positive performance of this revenue head include improved profitability by some established companies, improved compliance and enforcement activities by the authority.”

On the whole, Zimra collected $2,059 billion in the first quarter of 2019, which was 41,5 percent against the target of $1,455 billion.

After deducting refunds of $114,98 million, net collections were $1,944 billion in the first quarter.

Almost all revenue heads performed well, with VAT on local sales generating $336,70 million up from the $265,7 collected in Q1 of last year.

VAT on imports also went up to $127,27 million against a target of $117,60 million, mainly driven by increased volumes of imports and the floating of the exchange rate.

Excise duty collections amounted to $565,65 million against a target of $242,19 million.

The revenue head grew by a marginal 1,09 percent from the $90,41 million realised in Q1 2018.

The intermediated money transfer tax (IMTT) collections amounted to $282,84 million against a target of $150 million, representing a 5333,99 percent rise from the $5,21 million collected in Q1 2018.

Individual tax collections amounted to $235,91 million against a target of $235,21 million.

Customs duty, carbon tax, withholding tax, mining royalties and “other taxes”, were the revenue heads that didn’t meet or surpass the set targets.

Jokonya expects revenue performance to “maintain a positive trajectory”.

Analyst Persistence Gwanyanya told Business Weekly yesterday that while revenue collections have been satisfactory, he expressed concern over the individual tax head.

“While improved revenue performance from the last quarter of 2018 to first quarter of 2019 is largely viewed as positive step towards fiscal re-balancing, which is necessary for the achievement of currency stability, some of us have remained overly cautious about its sustainability for a number of reasons,” said Gwanyanya.

“It continues to worry me that individual taxes continue to drive this revenue performance as this is a reflection of the consumptive nature of our economy.

“However, this could be understandable as revamping production is a long-term process especially for a country that experienced massive de-industrialisation for more than two decades.”

Gwanyanya said it will take time for corporate taxes to contribute significantly to the country’s total revenues, until such a time when re-industrialisation gathers momentum.

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