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The Zimbabwe Revenue Authority (ZIMRA) has announced that it will be conducting compliance checks among businesses to assess tax adherence across all tax categories.
This initiative comes at a critical time when the government’s revenue collection is falling short of targets, prompting ZIMRA to remind taxpayers with outstanding returns to submit them promptly to avoid penalties.
As of August 2024, the government collected ZiG 48.5 million, which is 10.05% below the target of ZiG 54 million. The total revenue for August was ZiG 7.49 billion, falling short of the budgeted ZiG 7.79 billion by 3.84%.
Notably, there were significant shortfalls in Income Taxes, which decreased by 18.73%, and VAT, which dropped by 16.79%. However, customs duties and taxes on financial transactions performed better, partially offsetting these deficits.
Zimbabwe faces considerable challenges in tax collection, primarily due to the high level of informality in its economy and the prevalence of cash transactions. The government introduced a Presumptive tax aimed at capturing revenue from informal businesses, which has only yielded 3% of the targeted amount in the first eight months of the year. This tax applies to sectors such as hair salons, bottle stores, and public transport operators, but has struggled to integrate informal businesses into the formal tax system effectively.
In the first eight months of 2024, only ZiG 35.2 million was collected against a target of ZiG 1.2 billion, highlighting the significant hurdles the Treasury faces in revenue collection from the informal sector.
ZIMRA’s compliance checks are part of broader efforts to enhance tax collection and ensure that all businesses contribute fairly to the national revenue. With the ongoing challenges posed by the informal economy and cash-based transactions, the government is under pressure to find effective solutions to improve tax compliance and boost revenue generation.
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