HomeBusinessImport restrictions boost Zimra’s Q3 revenue collections

Import restrictions boost Zimra’s Q3 revenue collections

THE Zimbabwe Revenue Authority (Zimra) says the restriction on imports has stimulated local production, resulting in a positive contribution to the fiscus.

BY TATIRA ZWINOIRA

In July, government promulgated Statutory Instrument (SI) 64 of 2016 which removed some products from the open general import licence, requiring importers to get licences to bring those products into the country.

In a third quarter report for 2016, Zimra board chairperson Willia Bonyongwe said gross collections were 6% up to $919,91 million from $866,96 million realised in the second quarter of the year.

“The SI 64 has in effect stimulated local manufacturing production, which improved capacity utilisation by the companies whose products are protected by the SI. This had a positive outcome on their profitability, and a marked improvement in their contribution to the fiscus during the quarter,” Bonyongwe said.

“SI 64 should, other things remaining equal, also have a multiplier effect on the economy in the medium term with rising employment levels and increasing aggregate demand.”

She said importers were now facing challenges in accessing their Nostro accounts to process transactions because of limits set on the utilisation of foreign currency.

Value added tax (VAT) on imports realised $89,79 million, which exceeded Zimra’s set target of $86,90 million. From January to September, a total of $261,48 million was collected.

However, revenue from VAT on imports declined by 22, 60% when compared to the third quarter of 2015.

Compared to the second quarter of the year, VAT on imports increased by 4,02%.

Revenue foregone during the quarter amounted to $27,94 million.

The positive performance of the revenue head enhanced the imports of raw materials used by the local industry as well as other companies which are recapitalising, Bonyongwe said.

The Confederation of Zimbabwe Industries said it expected 47% of their members to be seeking to retool by the end of this year.

“The good performance was surprising and was enhanced by efficiency and the positive effect of the fight against corruption. In the short-term, the performance should remain rather shaky,” Bonyongwe said.

Estimates show that only 20% to 25% of companies that were operating in 1995 are still operational today and that over 4 000 have closed in that 20-year period.

Only four sectors in manufacturing have capacity utilisation levels above 10% and these include metals at (23,30%), beverages and tobacco (21,30%), paper and printing (11,20%) and foodstuffs at 10,70%.

Other contributors include wood and furniture at 8%, non-metallic minerals (7%), transport and equipment (6,7%), clothing and footwear (4%) while chemicals and petroleum and textiles are at 3,9% each.

In terms of customs duty, gross collections contributed $64,32 million during the period under review and of this, $64,10 million were net collections which posted a decline of 28,23% compared to the third quarter of 2015 collections of $89,32 million.

Net revenue for customs duty declined by 5,04% when compared to the second quarter of the year. Year to year collections in this regard amounted to $200,74 million.

“The unsatisfactory performance was mainly due to revenue forgone through concessions, trade agreements and rebates amounting to $150,75 million, and government policies which were introduced to curb the influx of imports of designated manufactured products. Positive results have already been reported by some companies who have increased their capacity utilisation to meet local demand,” Bonyongwe said.

“The introduction of Conformity Based Commodity Assessment has forced other importers to shun imports because they could not meet the set quality standards.”

According to Zimra, the third quarter was characterised by the softening of global commodity prices which had a direct impact on the performance of the country’s major foreign currency exports such as diamonds, platinum, gold and chrome.

However, the strengthening of the United States dollar has also continued to negatively affect Zimbabwe’s export competitiveness.

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