Tax arrears balloon to $2.58 billion, says Zimra

Zimbabwe Revenue Authority (Zimra) says tax arrears have ballooned to $2,58 billion from $1,97 billion last year as privately-owned enterprises are increasingly failing to service their tax obligations due to the country's continued economic meltdown.

The national tax collector's chairperson, Willia Bonyongwe, yesterday said private companies contributed over 70 percent to the national tax debt, while government had an outstanding debt of 0,18 percent and municipalities, parastatals and State-owned entities' tax debt amounted to 26,77 percent.

"The debt is made up of 52,1 percent principal debt, 20,2 percent in penalties and 26,6 percent in interest," she said in a 2016 first quarter revenue performance report.

Consequently, the national tax collector missed its first quarter target by 15,89 percent after collecting $725 million from a target of $862 million.

Bonyongwe noted that the dismal revenue performance was expected as a resulted of continued company closures.

"Zimbabwe's economy is obviously going through troubled waters. The economy needs a big push to stimulate sustainability," she said, adding that efforts were being made to attract foreign capital inflows.

"But in the meantime, there is much Zimbabweans can do themselves. Firstly, to curb all unnecessary consumption imports and concentrate on increasing productive capacity with the resources available," she added.

This comes as Zimbabwe is tilting towards recession - its first since 2008, when hyperinflation clocked 231 million percent and President Robert Mugabe lost his first-ever election.

Deflation has taken root as consumer demand shrinks and the economy struggles with a shortage of dollars.

Once bustling factories in Harare and other major cities and towns are now rusty shells, as companies struggle to shake off effects of the 1999-2008 economic downturn that cut gross domestic product by about half.

In addition, the mines are reeling from the fall in commodity prices and a drought has left 16 percent of the population needing food aid.

Formal unemployment stands at more than 80 percent and power shortages are getting worse.

Meanwhile, in the period under review Zimra realised the bulk of its revenue from individual tax - which contributed 23,3 percent - followed by excise duty, accounting for 22,1 percent.

Value added tax (Vat) and local sales contributed 18 percent while Vat on imports accounted for 11,5 percent with the remainder coming from the rest of the heads.

Corporate income tax contributed $52,5 million to total revenue during the quarter while revenue from withholding tax on contracts amounted to $18 million only 89,4 percent of the $20,1 million target.

Carbon tax was 89,4 percent of the targeted $9 million at $8,1 million, with mining royalties closed the quarter 45 percent shy of the $24,5 million target at $13,3 million.

Revenue from other taxes amounted to $9,6 million which was 69,1 percent below the targeted $13,9 million.

Bonyongwe noted that the actual revenue collected across all revenue heads was below target and disappointingly below 2015 first quarter, with the exception of Vat on local sales, Dividends, Fees, Interest and Remittances (DFIR) and other taxes

"The major reason for this is obviously the economic environment . . . other reasons accounting for the poor revenue collection are non-compliant tax payers, corruption and lack of complete automation," she said.