Staying in the mind of ZIMRA
Every Quarter the Zimbabwe Revenue Authority (ZIMRA) reports on its 3 months performance to its various stakeholders. We believe the most important stakeholder is the tax payer. Tax payers need to understand the mind of ZIMRA to stay compliant all the time. In our analysis below we mostly focus on impact factors that can help our clients comply and forecast their tax plans. Below we make a brief summary analysis of the 2021 3rd Q performance report. Lets all get prepared for the tax budget coming up this month of November 2021.
Overall tax collections
The authority achieved a positive variance of 17.41% in overall tax collections for the 3rd Q of 2021.Year to date, a positive variance of 11.57% on tax collections was recorded. Most tax heads achieved positive performance except for VAT on local sales that was, -21.55% behind target. Other tax heads that tracked behind target included mining royalties ,custom taxes, DFIR and CGT .
Tax heads contributions to the fiscus
Major contributors to the tax authority’s pocket for the quarter were individuals (17.48), companies (17.18%), VAT on local sales (16.13%), Excise Duty (11.92%) and IMTT (10.51%).
ZIMRA’s strategies on plugging revenue leakages
The Authority continued to fight corruption and fraud through various initiatives aimed at plugging revenue leakages. Major initiatives on the ground included;
- Transit management through Electronic Cargo Tracking Systems. A three-day transit period is currently being fostered.
- Compliance checks were being fostered to curb abuse of import concessions such as immigrant’s rebate, miner’s rebate, tourism rebate and temporary importation rebates.
- Anti-corruption strategies included lifestyle audits, mystery shopping, automation of processes to reduce human interventions, asset forfeitures, disciplinary actions against corruption perpetrators and implementation of an internal anti-corruption campaign.
ZIMRA’s revenue enhancement strategies to improve collections
- Foreign currency voluntary disclosure compliance project.
- Debt management.
- Joint post clearance compliance enforcement.
- Post clearance verifications.
- Investigations of tax and customs cases.
Outlook
The Authority will implement intensified revenue enhancement strategies in the remaining period of the year and encourages tax payers to comply with tax laws and regulations voluntarily.
Shaphat pigeon view on the report
We encourage tax payers to comply in all tax heads and take advantage of voluntary disclosures if need be. Tax heads that had negative performance for the third quarter may be shaken in the last quarter of 2021 through revenue enhancement strategies in place. The individual tax head that is popularly known as PAYE is likely to outperform all other tax heads as we anticipate companies to adjust employee salaries and pay bonuses as we approach festive season. On the other hand companies should take an opportunity to level out their income tax dues on the 4th Q QPD due on 25 December 2021. We await for the 2022 tax budget, where we anticipate location tax thresholds to be reviewed upwards to capture unregistered businesses. We also anticipate foreign currency transactions to be the talk of the business community after the budget speech.
Summary Compiled By;
Holderness Magaragada CA(Z),RPAZ,CAWNM
Constantly visit ZIMRA website for tax knowledge, recent notices and announcements. I hope this article will help you guys to take corrective actions preparing for your 2021 & 2022 ITF 263s. In God we trust. Get in touch with me on 0718 080 008 or 0780 449 933 or www.shaphat.com if you need help to set up your own business accounting function. This will also smoothen your tax compliance and other statutory compliance needs such as PRAZ, NSSA, ZIMDEF, SDL and ZTA.