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Nqobile Bhebhe, Senior Business Reporter

INDIVIDUAL taxpayers and companies were the highest contributors to Government revenue last year as the Zimbabwe Revenue Authority (Zimra) collected an annual net total of Z$2 trillion with Z$935 billion realised during the fourth quarter ended 31 December 2022.

A revenue performance report released yesterday indicates that the tax authority surpassed the 2022 fourth-quarter revenue collection target by 34,05 percent, and the annual target by 26,47 percent.

Zimra collected total net revenue of Z$2 trillion in 2022 against a target of Z$1,6 trillion.

In his report, Zimra board chairman, Mr Antony Mandiwanza said the authority is expecting to grow net revenue again this year in line with the projected positive economic growth.

Despite global headwinds, the country’s economy is projected to grow by 3,8 percent on the back of anticipated favourable international commodity prices, stable power supply, tight monetary and fiscal policies, and continued use of the multi-currency regime.

During the annual period under review, individuals were the top contributors of revenue at 18,76 percent followed by companies at 14,57, excise duty 13,44 percent and value-added tax on local sales 13,12 percent, and VAT on imports at 11,31 percent.

On a quarterly basis, individuals also dominated the fourth quarter at 18,88 percent, followed by excise duty 14,16 percent, VAT on local sales, 14,11 percent, companies accounted for 13.92 percent, and VAT on imports was 12.06 percent.

“Tax from individuals exceeded the set target by 70,92 percent and revenue growth was 76,69 percent in real terms as compared to Q4 2021,” said Mr Mandiwanza. 

“The positive real growth is mainly attributable to salary adjustments, bonus payments, partial payments, and full payments of salaries in foreign currency.

“Companies collections grew by 10,05 percent in real terms as compared to Q4 2021. The authority intensified various revenue-enhancing activities like sector-based audits and door-to-door visits to harness revenue from various economic sectors. The positive real growth is also attributable to increased foreign currency revenue from companies.”

The tax authority has vowed to intensify its tax collection drive by implementing a block management system (BMS), a mechanism that groups potential tax payers into geographical locations for easy management and tax collection.

It noted that the BMS entails zoning of taxpayers by geographical location and that will result in officials being assigned to manage the demarcated areas.

The zones include city centres, flea markets, farms, industrial areas as well as informal traders’ and rural business locations.

By doing so, Zimra intends to build partnerships with all taxpayers who have been urged to cooperate and support its officers in the implementation of BMS.

About 70 percent of Zimbabwe’s economy is driven by the informal sector, according to researchers, hence the need to find ways of taxing the sector.

Meanwhile, Zimra said its net collections from VAT on local sales grew by 59,99 percent in real terms from Q4 2021 mainly attributable to the authority’s fiscalisation enforcement strategies.

The positive growth is also a reflection of the increased real consumption of goods and services in the 2022 festive season as compared to the prior year.

Mr Mandiwanza said customs and VAT on imports tax heads surpassed their targets by 39,46 percent and 52,51 percent respectively.

The positive performance of the trade-related tax heads is attributed to growth in imports, which grew by 508,27 percent from Q4 2021.

On the Intermediated Money Transfer Tax: (IMTT) revenue contribution, Zimra said the transaction-based tax head performed above the set target by 26,31 percent and real revenue growth was 35,14 percent from 2021 for the quarter under review.

It added that the real growth in IMTT mirrors the growth in electronic transactions in the economy. 

IMTT on domestic foreign currency transfers has since been reduced from four percent to two percent as most entities are now preferring to settle transactions in cash instead of electronic transfers.

The objective of the IMTT was to bring the previously untaxed informal businesses under the tax bracket but formal businesses are saying it is double taxation.

Tax payment is the most sustainable source of funding for public services and the Government can only meet its mandate of providing services to citizens if individuals and businesses meet their obligation of paying taxes.

Mr Mandiwanza said the Beitbridge Modernisation Project and commissioning of the new commercially improved smooth flow of goods and persons.

This has resulted in major improvements in the clearance of goods and people as they enter or exit the country. There was a notable improvement in the clearance of traveling passengers in and out of Zimbabwe during the 2022 festive season.