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Corporate Tax Collected Declines By 66%

8 February 2023
Staff Reporter

By Ntokozo Nkambule

“PAYE collected in the quarter amounted to E1.04 billion against the previous year’s collection of E983 million which is a 6% increase. Year-to-date (YTD) collection also increased by 7% when compared to prior year collection” notes the Ministry of Finance’s Second Quarter Performance Report for the 2022/23 financial year.

The report attributes the increase to the partial 3% and 1% once-off cost of living adjustments that were implemented by the government.

In terms of the total income for taxes which includes PAYE, Company Tax, Other Income Tax (OIT), and Graded Tax, the figure collected stood at E1.46 billion for the quarter. This amount indicates a 20% decline from the collection made in the same period last year.

Furthermore, the report notes that company tax collected in the quarter amounted to E238 million which reflects a 66% decline when compared to E701 million collected in the same period last year. The ministry attributes the decline in the collection to provisional tax payments accounted for in July 2021 instead of June 2021, as a result of taxpayers making the payment beyond the cut-off time which did not happen in the current year.

Despite this anomaly, YTD collections in corporate tax amounted to E805 million which is 23% below the collection of the previous year. This is attributable mainly to lower-than-anticipated economic growth. YTD collection compared to the annual target is slightly below normal at 39%.

“Overall, total revenue collected in the second quarter amounted to E4.7 billion which indicates an 11% decline when compared to revenue collected in the same quarter of 2021/22. This performance is mainly attributed to a decline in revenue received from some revenue items. Revenue items that reflected a decline in performance in the second quarter compared to last fiscal year’s second quarter include SACU, company tax, value added tax (VAT), graded tax, lotteries and gaming, motor vehicle levy, alcohol, and tobacco levy, property income, fees and fines and education loan repayment (ELR)”

Other Tax Collections by the Ministry

  1. Other Income Tax (OIT) collected in the quarter amounted to E176 million indicating a 24% increase in the collection made for the same period last year. YTD collection also improved by 24% from the previous year’s collection.
  2. Taxes on Goods and Services (VAT, SACU, fuel tax, and other minor taxes collected in the quarter amounted to E3.2 billion which is 5% below collection in the same period last year. The underperformance in the quarter is attributed mainly to the decline in SACU revenue and VAT. YTD collection amounted to E6.1 billion which reflects no growth compared to last fiscal year.
  3. SACU Receipts in the quarter amounted to E1.46 billion which is 9% below collections made in 2021/22. YTD collections amounted to E2.9 billion which reflects 50% of the expected revenue for the year.
  4. Value Added Tax collected in the quarter amounted to E1.3 billion indicating a 3% decrease in the collection made for the same period last year. YTD collection also improved by 12% from the previous year’s collection. The YTD collection of the annual target stands above the mid-year target at 63%. The positive performance is attributable to the debt relief program where taxpayers have made the commitment to settle the principal for outstanding VAT debts.
  5. Fuel Tax collected in the quarter amounted to E331 million indicating a 1% increase in the collection made for the same period last year. This performance is due to increased quantities of fuel sold. YTD collection also declined by 2% from the previous year’s collection.

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