STATEMENT BY THE ZIMRA BOARD CHAIRMAN ON
REVENUE PERFORMANCE FOR THE FIRST QUARTER OF 2011
Mr S Moyo, ZIMRA Board Chairman
Introduction
It gives me great pleasure to present to you the revenue performance report of the
Zimbabwe Revenue Authority (ZIMRA) for the first quarter of 2011.
Overview
The year 2011 is progressing well in terms of revenue collections against targets, despite
the liquidity challenges and the slow pace at which the economy is growing. Total gross
collections for the first quarter amounted to US$618.9 million against a target of US$555.2
million resulting in a positive variance of 11%.
Cumulative net collections are now at US$573.2 million against a target of US$555.2
million, giving a positive variance of 3%. Most of the revenue was realised from Value
Added Tax (VAT) and Individual Tax, which contributed US$249.6 and US$129.6
respectively. Collections and targets for the first quarter are as shown in the table below:
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Table 1: 2011 First Quarter Revenue Collections
Individuals
Companies
Actual
Collections
US$
MOF target
US$
134,050,078.37
105,385,000.00
60,207,499.73 35,000,000.00
242,378,651.96
VAT
Variance to MOF
(US$)
241,000,000.00
%
variance
28,665,078.37
27%
25,207,499.73
72%
1,378,651.96
1%
Customs Duty
78,111,089.33 70,000,000.00
8,111,089.33
12%
Excise Duty
62,555,263.33 56,600,000.00
5,955,263.33
11%
Other Taxes
41,634,487.73 47,245,000.00
5,610,512.27
-18%
The following bar graph shows the actual collections versus the target per revenue head for
the first quarter of 2011.
2011 FIRST QUARTER REVENUE COLLECTIONS
300,000,000.00 250,000,000.00 200,000,000.00 A
M
O
U
N
T
150,000,000.00 100,000,000.00 50,000,000.00 ‐
INDIVIDUALS
COMPANIES
VAT
CUSTOMS DUTY
EXCISE DUTY
OTHER TAXES
ACTUAL
134,050,078.37 60,207,499.73 242,378,651.96 78,111,089.33 62,555,263.33 41,634,487.73 MOF TARGET
105,385,000.00 35,000,000.00 241,000,000.00 70,000,000.00 56,600,000.00 47,245,000.00 TAX HEAD
Fig 1: Collections versus target bar graph
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VAT contributed the most revenue, bringing in 39% of total collections. Individuals came
second by contributing 22%, whilst Customs Duty and Companies Tax contributed 12%
and 10% respectively. The rest of the revenue heads’ contributions are as represented in the
pie chart below:
2011 FIRST QUARTER REVENUE COLLECTIONS
EXCISE DUTY
10%
OTHER TAXES
7%
INDIVIDUALS
22%
CUSTOMS DUTY
12%
COMPANIES
10%
VAT
39%
Fig 2: Revenue collections pie chart
Individuals
Collections under this revenue head were 27% above target. US$134.1 million was collected
against a target of US$105.4 million. The revenue inflows under this tax head have
increased significantly from the 2010 first quarter collections of US$67.9 million. This
sterling performance is attributable to some companies which reviewed their employees’
salaries upwards. Some companies have resumed operations this year, hence the slight
increase in Pay As You Earn (PAYE) collections.
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Companies
A total of US$60.2 million was collected against a target of US$25.2 million resulting in a
positive variance of 72%. This is an increase from the 2010 first quarter collections of
US$42.4 million. The performance of the revenue head can be attributed to the improved
capacity utilisation and the first quarterly payment date (QPD) which was 25 March 2011.
The revenue head is expected to grow in the next quarter because the second QPD
instalment will be 25% compared to 10% in the first quarter. Most companies’ capacity
utilisation will also be improving as more avenues of financing are opening up.
Value Added Tax
Collections under this revenue head were US$242.4 million against the targeted US$241
million resulting in a positive variance of 1%. The performance of the revenue head
improved from US$167 million contributed in the first quarter of 2010. VAT on Local Sales
contributed 56% of total VAT collections mainly because the local industry’s capacity
utilisation has been gradually picking up.
It is also pleasing to note that compliance levels amongst our clients have improved
drastically as a result of the consistent audits and intensified publicity campaigns through
both the print and electronic media which the Authority is undertaking. Tobacco sales on
local auctions have increased the disposable income especially amongst farmers who in
turn are spending the proceeds on consumables which attract VAT.
Customs Duty
Under this revenue head, ZIMRA collected US$78.1 million against a target of US$70
million and this constitutes a 12% positive variance. These collections have increased from
the 2010 first quarter which contributed US$66 million. The performance of the revenue
head is mainly attributed to the fact that the local industry is not yet fully capacitated,
hence the need for local products to be complemented by foreign products. The
Zimbabwean economy continues to absorb large amounts of imports of finished goods. As
a result, Customs Duty revenue will continue to be significant as companies and
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individuals import raw materials and goods to improve capacity utilisation and substitute
local products respectively.
Excise Duty
The revenue head realised US$62.5 million against a target of US$56.6 million resulting in a
positive variance of 11%. Excise on Fuel was the main contributor with 26% while beer
weighed in with 21%. The revenue collections rose from the 2010 first quarter which raked
in US$34.5 million. Excise Duty performed well due to improved audit and follow ups
from ZIMRA and growth in demand for fuel in the economy as industry capacity
utilisation is gradually picking up. As the economy recovers and consumers of excisable
products get more disposable income, this revenue head’s performance is expected to
improve.
Other Taxes
Other Taxes consist of Domestic Dividends and Interest, Other Income Tax, Tobacco Levy,
Other Indirect Taxes and Carbon Tax. Collections under this revenue head were US$41.6
million against a target of US$47.2 million resulting in an 18% negative variance. The
performance of this tax head was below expectations because Mining Royalties, which
contribute the bulk of the revenue through diamonds, faced challenges on the international
market.
Some companies have retained dividends to recapitalise their businesses’ operations
thereby restricting revenue realised from domestic dividends base. The 2011 tobacco
agricultural selling season will be in full swing in the second quarter and as such revenue
inflows from the Tobacco Levy will be expected to improve. The demand for fuel has been
increasing as many companies aim to boost capacity utilisation. Fuel imports for this
quarter were 285 million litres compared to 12.4 million litres during the same period in
2010.
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Gratitude and Appreciation
Finally, I would like to express the Authority’s gratitude and appreciation to its clients,
employees, management, the Ministry of Finance, my fellow Board Members and its many
stakeholders for their tireless efforts in support of the Authority in the discharge of its
mandate. We have started the year on a high note and I am optimistic that we will have a
brighter future characterised by a stable economic environment.
STERNFORD MOYO
CHAIRMAN OF THE BOARD
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