ZIMRA uncovers US$670m in unpaid dues amid economic strain

STAFF WRITER
The Zimbabwe Revenue Authority (ZIMRA) has unearthed staggering levels of non-compliance, revealing that both private firms and public entities owe a combined ZiG$1.92bn and US$595.2m in unpaid taxes.
This discovery sheds light on the extent to which businesses are buckling under Zimbabwe’s harsh economic conditions and one of the most burdensome tax regimes in the world.
Analysts believe a significant portion of these arrears stem from deliberate tax evasion, as companies grapple with declining liquidity and an unforgiving regulatory environment.
According to ZIMRA’s report for the second half of 2024, total outstanding taxes stood at ZiG$2.4bn and US$744m. A bulk of these obligations remains unpaid due to the difficult balancing act companies face—meeting high tax demands while remaining solvent.
Faced with mounting pressure, many firms have reportedly shifted to informal operations to escape enforcement, resulting in further revenue losses for the state. Zimra said domestic unpaid taxes alone reached ZiG$1.8bn during the review period.
In US dollar terms, an additional US$674.96m was still outstanding, with trade-related tax arrears accounting for ZiG$556.41m and US$69.05m.
“The authority is owed by both private companies and public institutions, including state enterprises and parastatals,” ZIMRA board chairperson Antony Mandiwanza said.
“Notably, 80% of the outstanding debt stems from new assessments resulting from thorough audits and investigations, reflecting the authority’s proactive approach to identifying and addressing discrepancies.”
He added that the remaining 20% represents overdue current obligations, with the tax agency actively pursuing recovery strategies to enhance compliance and support fiscal discipline.
During the same period, ZIMRA paid out tax refunds totaling ZiG$1.99bn, or 2,81% of gross collections—down from 3,69% in the first half of 2024.
The decline is attributed to policy shifts that reclassified many formerly zero-rated goods to standard VAT categories or exempt status.
ZIMRA collected a gross total of ZiG$110.50bn in taxes during the second half of 2024, outperforming its target of ZiG$105.73bn by 4,51%. After deducting refunds of ZiG$3,38bn, net collections stood at ZiG$107.12bn—1,31% above target.
“This robust performance in net collections underscores the resilience of the tax system despite external challenges,” Mandiwanza said.
“It demonstrates the effectiveness of fiscal policy measures and administrative efforts to meet revenue expectations amid fluctuating economic conditions.”
The largest contributions to revenue came from Value Added Tax (VAT) at 30%—including 19% from local sales and 11% from imports—followed by Pay-As-You-Earn contributions (22%) and Excise Duty (11%).
Overall net revenue for the period totaled ZiG$69.22bn, exceeding the set target by 7,15%.
Mandiwanza credited the gains to stabilisation of the exchange rate, which created a more predictable economic environment and boosted business confidence in short- to medium-term planning.
“Reforms that narrowed zero-rated goods and exemptions significantly boosted VAT collections, which surpassed target by 88%,” he noted. “We also saw strong results from digitalisation efforts, including onboarding VAT taxpayers to the fiscalisation data management system and growing use of electronic money platforms. The Intermediated Money Transfer Tax (IMTT) performed particularly well.”
Looking ahead, ZIMRA aims to collect US$7.155bn in 2025—representing a 17% increase over the previous year’s target. Mandiwanza said this ambitious goal is underpinned by enhanced tax compliance, expanded digital tax infrastructure, and strengthened administrative capacity.