The Zimbabwe Revenue Authority (Zimra) exceeded its cumulative net revenue target for the first half of the year by 36.84% to $491.49 billion, thanks to intensified compliance strategies.
Year-to-date net revenue increased from an initial target of $359.16 billion for the first half and was up approximately 84% from $195.17 billion at the end of the 2021 comparative period.
In its recently released annual report, Zimra said that due to this performance, it expects to exceed its net revenue collection target of $809.4 billion by the end of the year.
“The authority started 2022 on a positive note with cumulative net revenue collections in the first half (January 1 to June 30, 2022) of $491.49 billion against a target of $359.16 billion ( 36.84% above target) The 2022 annual revenue target of $809.40 billion is expected to be revised upwards in the second half of 2022,” Zimra said.
“Going forward, the authority expects to collect net revenues of over $951 billion, supported by the intensified implementation of various compliance strategies to ensure accurate and timely tax remittances from various segments. Real revenue growth is expected to exceed 10%, supported by improving manufacturing sector capacity utilization and projected growth in the mining sector where the industry is expected to hit the US$12 billion target by 2023.”
Zimra added that infrastructure development, especially the completion of part of the Beitbridge-Chirundu highway that connects Zimbabwe to the North-South Corridor, is expected to play a huge role.
“Inflation and exchange rate depreciation will also result in higher nominal income growth,” Zimra said.
Due to the depreciation of the local currency, from $108.66 at the beginning of the period under review to $370.96 at the end of June, against the US dollar, Zimra collects higher taxes.
This is despite the industry being reeling from rising costs, including the record hike in bank interest rates of 200% from an initial 80%, implemented last month.
Based on Zimra’s first quarter report for the year, value added and corporate tax managers are the top contributors to tax collections.
“The authority’s five-year strategy (NDS-1) (2021-2025) is aligned with the government’s National Development Strategy 1, which also spans the same period. The strategy mainly supports the national priority pillar of economic growth and stability under NDS-1,” Zimra Chairman Anthony Mandiwanza said.
“In direct support of the government’s efforts to develop and stabilize the economy, (in 2021) Zimra collected net revenues of $463.57 billion against a target of $387.40 billion (19.66% above). above target) Revenues increased by 154.77% in nominal terms compared to 2020. However, revenues increased by 4.73% in real terms from 2020 (after adjusting for inflation) against an estimated real gross domestic product (GDP) growth of 5.8% in 2021. The net revenue-to-GDP ratio increased from 15.73% in 2020 to 19.56% in 2021.”
The overall success rate of implementing the authority’s strategy increased from 60.6% in 2020 to 72.3% in 2021.