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Backlash over rice tax



THE Confederation of Zimbabwe Retailers (CZR) came out guns blazing yesterday, slamming the Zimbabwe Revenue Authority (Zimra) for undermining business confidence following latest moves to charge Value Added Tax (VAT) on rice retrospectively.

Reports at the weekend suggested the tax collector was planning to charge VAT on rice packaged in 25kg bags and below retrospectively from February 2017.
The plan has unsettled business.

Yesterday, the CZR warned that Zimra’s controversial move confirmed government’s lack of clear and consistent policies, adding that it would affect millions of low-income families.
A VAT exemption for rice was announced through Statutory Instrument (SI) 9 of 2006, before being amended through SI 20 of 2017.

CZR said the regime under which rice was standard rated only remained in force until February 16, 2017 when SI 26A of 2017 was published repealing SI 20 of 2017.

It said the effect of the repeal was to restore the position set out in SI 9 of 2016 that all rice, including prepacked rice in packages of less than 25kg, would be exempt from VAT.

“The decision by Zimra lays bare the need for policy consistency,” CZR president Denford Mutashu said in a statement yesterday.

“Zimra was quiet for three years, not indicating that VAT was to be collected on rice. It is only recently that it has sought to collect the VAT which was previously and still is exempt. We wish to point out that it is an established principle of law that no tax can be imposed on a party, unless the same is clearly set out in legislation. At present, the law is that rice is exempt from VAT and even the Zimra system has not been and is presently not charging VAT,” Mutashu said.

He said the decision violated property rights and would affect business confidence.

“We believe that for this economy to attract both local and foreign investment there is a need to have respect for the rule of law and policy consistency,” he said.

“As CZR, we state unequivocally that the VAT directive undermines His Excellency President Emmerson Mnangagwa’s pro-business stance enunciated by the Zimbabwe is open for business mantra.

“It is also important to note that it is illegal for Zimra to enforce collection of VAT on rice in retrospect and as well as currently as the laws do not provide for it. More importantly it is morally incorrect to attempt to charge VAT when rice is a staple food and we believe that charging will increase the price of this staple food which will affect low income families,” Mutashu said.

He said dialogue between CZR and the government should continue on the issue.

Our sister, paper, The Standard reported on Sunday that tough times lay ahead for some players in the rice supply chain as government was insisting on collecting a 15% VAT backdated to February 2017.

The payment of VAT running into millions of United States dollars could leave some players in financial distress or out of business altogether.

Earlier appeals by dealers for government to reconsider the VAT demand were rejected by Finance secretary George Guvamatanga.

In a September 23 letter, Guvamatanga said while Treasury noted the justification given for failure to charge and remit VAT as well as industry concerns over the financial burden that may result from collection of the outstanding taxes, the request for exemption could not be entertained.

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