COVID19News

Companies remain a key revenue source for Govt

The country’s ailing companies have emerged the biggest contributors to government revenue at a time when the world, Zimbabwe included, is reeling from the effects of Covid-19-induced lockdowns.

Zimbabwean companies, operating under difficult conditions have been adversely affected by the national lockdown to curb the spread of the global pandemic which came into effect on March 30.

According to the Zimbabwe Revenue Authority (Zimra) revenue performance report for the second quarter ended June 30, 2020, released this week, the companies, at 21 percent, were the top contributors during the period under review.

Net revenue collections during the second quarter of 2020 amounted to ZWL$20.11 billion against a target of ZWL$14.09 billion, translating to a positive variance of 42.75 percent.

“The revenue head (companies) recorded a positive performance mainly due to the nominal profits being recorded by most businesses as a result of the hyperinflationary environment,” said Zimra board vice-chairperson, Josephine Matambo, in the report.

“The authority (Zimra)’s compliance enforcement programmes also ensured sustained compliance under the difficult conditions of the lockdown. Though revenues dropped below target in April 2020, the eased lockdown conditions in June boosted revenue collections as more businesses resumed operations.”

The second biggest contributors for the second quarter are individuals at 17 percent followed by Excise Duties (15 percent), and VAT on Local Sales (10 percent).

On the individual contributions, Matambo said the cost of living adjustment effected during the period under review was behind the improvement in performance.

“The revenue head (individuals) registered a positive performance, mainly buoyed by cost of living adjustments, interbank rate adjusted salaries and cushioning allowances paid by most companies to cushion their employees against the hyperinflation scourge,” she said.

 VAT on Local Sales, however, missed the set target.

“The revenue head missed the set target after deducting refunds amounting to ZWL$1.49 billion,” explained Matambo.

“This unprecedented refund level was a deliberate tax administration measure on deserving claims to mitigate cash flow challenges for businesses during this Covid-19 environment. However, the revenue head’s performance in gross terms was positive mainly due to the high inflation and depreciation of the exchange rate that pushed the prices of most goods upwards.”

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