News / National
Zimra blow for rice dealers
20 Dec 2020 at 07:06hrs | Views
TOUGH times lie ahead for some players in the rice supply chain as the government insists on collecting a 15% value-added tax (VAT) on rice packages of 25kg and below backdated to February 2017.
The tax demand, which overides an exemption by then Finance minister Patrick Chinamasa, will see dealers paying duties for the period dating back 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 the government to reconsider the VAT demand were flatly 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.
"You will, however, appreciate that the reclassification of rice in packages of 25kg or less had a public policy objective," Guvamatanga said.
"More specifically, the measure was aimed at supporting the local packaging industry through promoting repackaging of cheaper bulk rice into smaller units.
"Furthermore, legislation to give effect to the measure was promulgated timely and taxpayers had an opportunity to seek clarity or raise concerns over any omissions with Treasury."
Guvamatanga said players that were seeking reversal of the directive must instead approach the Zimbabwe Revenue Authority (Zimra) with a payment plan.
Responding to questions from this publication, Zimra said it would collect taxes in line with its mandate.
The tax collector said all queries and concerns must be raised with the Finance ministry.
"The issue of VAT on rice has been discussed at various levels, in Zimra and the Ministry of Finance, and addressed in terms of the existing laws," Zimra said.
"Parties that may want to continue pursuing the issue are advised to raise the matter with the Ministry of Finance and Economic Development given that the matters in question pertains to policy."
Zimra said it relies on existing legislation in carrying out its mandate, apparently insisting on collecting the taxes.
The authority said its mandate was to administer the tax law and not to come up with new legislation.
"In carrying out this function, we rely on gazetted Acts and regulations and ensure compliance as per statute," Zimra added.
"Therefore, if the law provides for an exemption, we abide by that and do not collect any tax in such instances.
"On the other hand, where the law does not provide for an exemption, we also ensure the tax is paid."
In terms of the law, Zimra is collecting the tax at a standard rate subject to VAT at the rate of 14.5% for current sales and 15% for sales done before January 2020 on rice with effect from February 16, 2017.
The tax demand, which overides an exemption by then Finance minister Patrick Chinamasa, will see dealers paying duties for the period dating back 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 the government to reconsider the VAT demand were flatly 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.
"You will, however, appreciate that the reclassification of rice in packages of 25kg or less had a public policy objective," Guvamatanga said.
"More specifically, the measure was aimed at supporting the local packaging industry through promoting repackaging of cheaper bulk rice into smaller units.
"Furthermore, legislation to give effect to the measure was promulgated timely and taxpayers had an opportunity to seek clarity or raise concerns over any omissions with Treasury."
Guvamatanga said players that were seeking reversal of the directive must instead approach the Zimbabwe Revenue Authority (Zimra) with a payment plan.
Responding to questions from this publication, Zimra said it would collect taxes in line with its mandate.
The tax collector said all queries and concerns must be raised with the Finance ministry.
"The issue of VAT on rice has been discussed at various levels, in Zimra and the Ministry of Finance, and addressed in terms of the existing laws," Zimra said.
"Parties that may want to continue pursuing the issue are advised to raise the matter with the Ministry of Finance and Economic Development given that the matters in question pertains to policy."
Zimra said it relies on existing legislation in carrying out its mandate, apparently insisting on collecting the taxes.
The authority said its mandate was to administer the tax law and not to come up with new legislation.
"In carrying out this function, we rely on gazetted Acts and regulations and ensure compliance as per statute," Zimra added.
"Therefore, if the law provides for an exemption, we abide by that and do not collect any tax in such instances.
"On the other hand, where the law does not provide for an exemption, we also ensure the tax is paid."
In terms of the law, Zimra is collecting the tax at a standard rate subject to VAT at the rate of 14.5% for current sales and 15% for sales done before January 2020 on rice with effect from February 16, 2017.
Source - the standard
