Improved revenue collections for the first half of 2010 were attributed to significant improvement in economic activity, increased levels of compliance by clients and increased revenue collection efforts by the Zimbabwe Revenue Authority (ZIMRA). Notable progress has been recorded in the economy with particular reference to business confidence and capacity utilisation which has improved to around 35%.

Overview of First Half of 2010

Cumulative collections for the first half of the year stood at US$967.7 million against a target of US$794.4 million giving a positive variance of 22%. Value Added Tax (VAT) was the highest revenue contributor with 36% of total revenue collections. Individuals came second contributing 18% to total collections. On third position was Customs Duty which brought in 14% of total collections. The first quarter saw 47% of the first half revenue being raised as US$457.3 million was raked in. On the other hand, second quarter collections contributed 53% of first half collections after US$510.4 million was collected.

First Half Performance

Although the economic environment is still challenging with liquidity shortages, we expect the second half to perform better. The Authority will embark on various revenue generating activities to improve compliance and collections. The improvement in capacity utilisation by industry will also result in improved collections.

The 2010 first half collections against targets are shown below:

















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Graphically, the performance of the revenue heads is as shown in the bar graph below.

2010 First Half Bar Graph


The revenue heads’ contribution to total revenue is as shown in the pie chart below.

2010 First Half Pie Chart




The revenue head contributed 18% to total collections as US$169.2 million was collected against a target of US$139.1 million leading to a 22% positive variance.  The performance is attributable to marginal bonuses, back-pay adjustments and performance awards offered to employees especially in March and June. The rate of compliance improved due to the audits and follow ups on outstanding debts undertaken by ZIMRA regularly.

There is growing confidence in the economy and this has stimulated the performance of the revenue head. However, the facts that a number of organisations are still paying salaries within or slightly above the tax-free threshold continue to militate against the better performance of the revenue head.


The revenue head raked in 10% of total collections and to this end US$100.5 million was collected against a targeted US$65.1 million, leading to a 54% positive variance. The first half of 2010 witnessed a slight improvement in capacity utilisation and this, compounded with thorough audits being carried out by ZIMRA, resulted in the improved performance of the revenue head. The collections were also boosted by the first and second QPDs which were due in March and June respectively.

Many companies also embarked on recovery programmes and notable progress was recorded with particular reference to capacity utilisation and this boosted the revenue head’s performance.  The revenue head’s performance is still under threat however, due to the unavailability of affordable long-term capital and high interest rates being charged on credit borrowings by local financial institutions. Local industry is finding it difficult to borrow to recapitalise operations. 


Collections for the first half stood at US$351.3 million against a target of US$321 million, resulting in a 9% positive variance. The performance of VAT could be attributed to improved capacity utilisation levels. Some of the locally produced goods are improving in quality and competitiveness resulting in consumers buying these local products. This is consequently improving VAT on Local Sales.

The refurbishment of existing retail outlets, restocking, and expansion of network branches by some retailers have resulted in increased sales and accordingly VAT revenue inflows. VAT on imports was boosted by the high volumes of imports since the local industry is not yet operating at full capacity. With the increased audits being done by the Zimbabwe Revenue Authority, we expect the revenue head’s performance to improve as compliance levels rise.

Customs Duty

For the first half of 2010, Customs Duty provided 14% of total revenue. US$132.8 million was collected against a target of US$128.6 million giving a positive variance of 3%. The revenue head improved from contributing 14% in the first quarter to 16% in the second quarter. As the economy is rejuvenating, volumes of imports are improving hence the revenue head performed above expectations. Local industry is not yet operating at full capacity meaning that the shortfall will have to be taken up by imports. Although the economy is still illiquid, volumes of Customs Duty paying imports improved, resulting in more Customs Duty being collected. The level of performance of this revenue head is likely to be constant because without a huge injection of funds into the economy no major improvement is expected and the need for imports will always be there to cover the shortfall in the economy as a result of local industry’s low capacity utilisation.

Excise Duty

US$76.8 million was realised in the first half against a target of US$100.6 million giving a negative variance of 24%. Beer and fuel contributed the bulk of Excise Duty collections, contributing 76% of revenue under this revenue head. Excise on fuel has not brought in as much as was anticipated because volumes of fuel imported into the country have not reached the anticipated levels due to liquidity challenges.

Most excisable products are luxury goods and the minimal levels of disposable incomes that the average Zimbabwean worker earns monthly at the moment has  led to less consumption of these excisable products,  hence suppressed inflows to this revenue head. As the economy recovers and consumers of excisable products get more disposable income the revenue head is expected to improve in performance.

Other Taxes

This revenue head comprises of Domestic Dividends, Other Income Taxes, Carbon Tax, Tobacco Levy, Other Taxes and Non-Tax Revenue. Collections under this revenue head contributed 14% of total collections for the first half with US$136.7 million realised against a target of US$40 million, leading to a positive variance of 242%. Some companies have declared significant dividends to their shareholders and this improved performance of Domestic Dividends and Interest.

The increased volumes of fuel and foreign-owned vehicles entering the country boosted the performance of Carbon Tax.   Presumptive Tax and Road Access Fees also raked in considerable amounts to this revenue head. Zimbabwe is yet to receive certification from the Kimberly Process to sell its diamonds and once this is obtained, royalties from the diamond industry would boost performance of this revenue head.

The first half of the year 2010 has started on a very positive note and with the Revenue Collecting Agency demonstrating unmatched enthusiasm to duty, I am optimistic that this year’s target will be surpassed.