According to an annual report by the Zimbabwe Revenue Authority (ZIMRA) most of the revenue came from Value Added Tax (VAT), which accounted for 40 percent.

ZIMRA chairman, Sternford Moyo attributed the improved revenue to economic stability.

"Revenue inflows improved significantly towards the end of the year and the authority managed to surpass the annual target from the Ministry of Finance by 11 percent," Moyo said.

"Cumulative gross collections for the year amounted to $2.8 billion against a target of $2.5 billion.

"The positive performance of individual tax revenues was attributed to companies, which increased salaries and awarded bonuses during the course of the year as well as resumption of business by companies that had shelved operations."

ZIMRA is optimistic the economy will continue to improve and expects to surpass this year's targets.

On customs duty revenue, Moyo said the anticipated ban on importation of second hand motor vehicles older than five years accelerated collections as members of the public rushed to import cars before the deadline.

Excise duty contributed 11percent to the total revenue with collections of $306.6 million against a target of $236.5 million.

Fuel had the highest contribution of 63 percent towards this revenue head's collections.

Meanwhile, food prices and other basic commodities in Zimbabwe are set to increase following an announcement by Zimra that 25 percent surtax would be charged on the commodities starting January 1.

The tax would apply to various products.

By Special correspondent