Treasury still to finalise new 2020 revenue target

Faith Mazani

Treasury is yet to determine revenue targets for 2020, although a provisional target of $57.6 billion is being used.

Zimbabwe Revenue Authority (Zimra) Commissioner General Faith Mazani, said it is in line to meet the provisional target, while awaiting the new target that should be announced in the Mid-term Fiscal Policy Statement.

“Net revenue target for 2020 is to be agreed with the Ministry of Finance and Economic Development, but working with $57.6 billion. Current trend is indicating that the Authority will meet the target,” she said during the Authority’s annual general meeting recently.

“Net revenue is directly co-related to Gross Domestic Product (GDP).

“The new Zimra net revenue target will be announced as part of the Ministry of Finance and Economic Development’s Mid-Term budget review.”

Last year, Zimra collected net revenue of $23.19 billion against a target of $18.60 billion, a positive variance of 24.65 percent.

The net revenue to GDP ratio for 2019 stood at 18 percent against a regional average ratio of 15 percent.

There is general expectation that revenue collections this year could be seriously affected by the coronavirus (Covid-19) pandemic, which forced the Government to impose a national lockdown at the end of March to try and curb the spread of the highly infectious virus.

Business and economic activity have been slowed by the pandemic, but activity is now improving after lifting of tighter restrictions.

Zimra said it had collected $13.88 billion in the first quarter of this year, against a target of $12.27 billion, which was 10.42 percent above target.

And as at the end of May 2020, the authority had collected $22.49 billion against a target of $21.13 billion, which was 6.41 percent above target.

On another note, Zimra said it will engage Government over tax exemptions, which saw the tax collector forgoing around $17 billion in potential revenue.

“The revenue forgone from the goods and services that are either VAT (value added tax) zero rated or exempt from VAT was $13.82 billion, while revenue forgone from trade agreements and duty exemptions amounted to $3.19 billion,” said Ms Mazani in the tax collector’s 2019 report.

“The authority continues to monitor the trends in revenue forgone and advise the Government accordingly.”

Ms Mazani also said during 2019 Zimra realised a total of us$210 000 in penalties relating to transit fraud.

In general terms, transit fraud occurs when an importer declares that goods are passing through Zimbabwe to another country, but later delivers the same goods to the local market.

This resulted in Zimra employing the use of electronic cargo tracking and introduced the geo-fencing routing system on all transit trucks.

Ms Mazani said among other strategies, Zimra had strengthened partnerships with other law enforcement agents to combat corruption and also increased border surveillance to combat smuggling.

She said they had started using modern audit and investigation techniques to detect revenue declaration anomalies and that this resulted in the discovery of 485 vehicles, which had been irregularly imported.

The country, she said, stood to lose us$70 million in import revenue.

“We have also signed a memorandum of agreement with the Zimbabwe Anti-Corruption Commission (ZACC) and the two organisations are now working in partnership to combat crime.

“In terms of plugging revenue leakages through the use of electronic cargo tracking seals, we managed to increase the number of sealed trucks by 27 percent (from 31 701 in 2018 to 39 601 last year), thereby reducing the number of geo-fence violations by 44 percent,” said Ms Mazani.

She added that they were also using the Money Laundering and Proceeds of Crime Act to seize and attach properties acquired through fraudulent means.

The exercise has seen 601 cases being investigated in 2019 with recoveries to collect a total of $153.7 million underway.

She said to improve Zimra’s role on trade facilitation, they had introduced the mandatory pre+clearance of cargo system at ports of entries.

“Further, we are increasing the number of Authorised Economic Operator Programme (AEOs) clients and participating in the setting up of the One-Stop Investment Centre (OSIC),” said Ms Mazani.

“The authority is also contributing into the Zimbabwe Special Economic Zone Authority and the Border Efficiency Management Systems (BEMS) activities.

“We have also upgraded our Automated System for Customs Data (ASYCUDA) to ease the way of business. At the same time we have commenced working on the dry ports projects as announced by Finance and Economic Development Minister in the 2020 annual budget speech,” she said. – Herald