COLAs, Bonuses Boost 2020 Q4 Individuals Tax Earnings

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COLAs, Bonuses Boost 2020 Q4 Individuals Tax Earnings

The salary and cost of living adjustments (COLA) that some employers offered to their employees to cushion them against rising inflation resulted in the positive performance of the individual tax earnings contributing 15.02% in the fourth quarter of 2020, the Zimbabwe Revenue Authority (ZIMRA) has said.

According to the report, major contributors to net revenue collections for the quarter were: Companies (21.30%), Individuals (15.02%), Excise Duty (13.60%), VAT on Local Sales (12.89%) and VAT on Imports (10.83%).

Meanwhile, the clampdown on mobile money transfer services negatively impacted on the Intermediated Money Transfer Tax (IMTT), also known as 2c tax. Here are the 2020 Q4 Revenue Contributions by Tax Head:

Individuals: The salary and cost of living adjustments that some employers offered to their employees to counter rising inflation resulted in the positive performance of this tax head.

The government led the way in this regard as civil servants salaries were adjusted in an effort to give its workers a living wage. Some businesses also paid bonuses during the month of November 2020 which boosted collections under this tax head.

Companies: The positive performance during the quarter was mainly driven by a more stable macroeconomic environment ushered in by government reforms mainly in relation to currency and price stabilisation.

The fourth Quarterly Payment Date (QPD) at 35% formed the bulk of collections under this tax head. The Authority’s persistent compliance enforcement programmes also yielded positive results.

Excise Duty: The revenue head performed above target and was one of the highest contributors to revenue during the quarter accounting for 13.60% of total revenue.

Business operations were resuscitated under the level 2 lockdown, hence consumption of fuel increased, thus leading to higher excise duty collections. Increased demand for internet data under the new normal of working from home also contributed to the positive performance.

VAT on Local Sales: The revenue head performed below target in gross and net terms, although it constituted 12.89% of total revenue.

Inflationary pressures slowed down in the fourth quarter and refunds further negatively affected net collections. For the better performance of this revenue head, the business community is urged to adhere to the provisions of the 2021 National Budget to have their fiscal devices interfaced to the ZIMRA server.

Good corporate citizenry requires that business remit taxes in the currency of trade and offer receipts in the currency that the transaction was made. It is also the customers’ rights to demand receipts that reflect the actual payment made.

Customs Duty and VAT on Imports: Though the revenue heads performed above target, the stabilisation of exchange rates and limited trade and travel due to the lockdown, resulted in subdued collections and contribution to total revenue.

IMTT: The Intermediated Money Transfer Tax performed below target and only contributed 6.63% to the quarterly revenue. Monetary policy measures instituted in Q2 2020 have continued to impact negatively on the tax head as the activity is limited on mobile money platforms which had become a haven for parallel market activities.

Download full report on the link here



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