Total tax revenue during 2005 increased by 8.3 per cent over the previous year to stand at Lm691.1 million, the National Statistics Office said.

Tax revenue may be broadly classified under three main headings: indirect taxes, direct taxes and social security contributions.

Indirect taxes, at Lm313.6 million, made up 45.4 per cent of total tax revenues in 2005.

Indirect taxes are defined as taxes linked to production and imports. This tax category includes VAT, import duties, excise and other specific taxes on services, and on financial and capital transactions.

VAT is the most important component, followed by taxes on products (including excise duties). During the course of 2005, excise duties (mainly on cigarettes and petroleum) generated Lm59.2 million, while VAT accounted for Lm161.3 million.

Direct taxes, current taxes on income and wealth plus capital taxes and other current taxes yielded Lm237.4 million, making up 34.4 per cent of total revenue.

Revenue from social security contributions amounted to Lm140 million, with its relative share of total tax revenue standing at 20.3 per cent.

Total tax revenue as a ratio of GDP stood at 35.6 per cent in 2005, up by 1.3 percentage points from 2004.

This was due to indirect taxes and, to a lesser extent, social security contributions, as the ratio of direct taxes to GDP remained unchanged.

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