An investigation on the effectiveness of vat administration on revenue collection

Abstract

This research focused on the effectiveness of VAT administration on revenue collection. The researcher observed during audit that revenue collected from VAT is continuously decreasing when the economy started to be unstable. VAT administration that was used when the economy was stable is still being used to the unstable economy and this has caused a lot of challenges in VAT administration. This has highly negatively affected revenue collection on VAT. Descriptive research design was used to gather data using questionnaires and interviews as research instruments. A sample of 45 people was used comprises of registered operators, VAT officers, line managers and the managing director of Zimbabwe Revenue Authority (ZIMRA). The research finding indicated that the effectiveness of VAT administration on revenue collection is affected by the instability of the economy of Zimbabwe. The effectiveness of VAT administration is affected through its factors that are the registration of VAT taxpayers, processing of VAT returns, and collection of VAT arrears, penalties and interest, VAT refunds, VAT rates, VAT audits. The respondents also noted that the effectiveness of VAT administration of revenue collection is negatively affected due to the current economic hardships. The recommendations that were made were that ZIMRA should revise its VAT administration that were used during the stable economy to suits the unstable economy through decrease of VAT threshold, VAT rate, payment plan, frequent of VAT audits, registering of informal sectors.