News / Local
Zimbabwe prices soar as new taxes kick in
05 Jan 2024 at 00:53hrs | Views
THE year 2024 has started on a sombre note for citizens as prices of basic commodities surge in the wake of businesses implementing new government tax measures.
Meat dealers have indicated that they will be factoring the 15% value-added tax (VAT) in their meat and related products, while some businesses now require tax clearance from informal traders who buy goods above US$1 000.
Finance minister Mthuli Ncube, together with Zimbabwe Revenue Authority (Zimra) introduced the measures to "protect value chain integrity and transparency and to counter unfair competition by informal traders".
The standard VAT increased to 15% from 14,5% effective this month.
Ncube said the VAT is being enforced to allow fair competition.
In a notice to its customers, Texas Chicken said it had been forced to increase beef, chicken, pork and fish prices in line with the introduction of the 15% VAT by the government.
"In line with the gazetting of Statutory Instrument 248 of 2023, all of our meat products now include a 15% VAT component with effect from January 1, 2024," Texas Meats said in the notice.
Koala Park followed suit with their own notice.
On Tuesday, Zimra announced a raft of tough measures limiting the formal traders' access to commodities from manufacturers and retailers.
According to the new measures, manufacturers can now only sell their goods to wholesalers who are registered for VAT and have tax clearance certificates.
The wholesalers, in turn, only sell their goods to licensed and registered retailers while individuals can only buy goods worth not more than US$1 000 or its Zimdollar equivalent each 30 days.
"Please be advised that with immediate effect, any individual or business wishing to purchase more than US$1 000 (or the equivalent value in ZWL$ or ZAR) within a 30 day period from the N. Richards Group, is required to be a tax-registered operator with Zimra. We look forward to serving you during 2024," a leading wholesaler, N Richards said in a notice.
Beverages manufacturer Delta Beverages issued a similar notice, saying it would collect a surcharge of 30% for any above the standard price for remittances to Zimra for any trader that cannot required tax compliant documents , advising traders that this would apply to sales exceeding US$1 000 per transaction undertaken within a period of 30 days.
Varun Beverages Zimbabwe also issued its own notice saying: "We urge all our commercial partners to regularise their compliance documentation with immediate effect to forestall any disruption in our trading relationships."
Investment analyst Enock Rukarwa said this will cause an increase in prices of goods and services.
"The most direct impact is an increase in the prices of goods and services, which ultimately leads to reduction in consumer purchasing power. Given our highly informalised economy, this measure may increase informalisation as businesses avoid taxation," he said.
Meat dealers have indicated that they will be factoring the 15% value-added tax (VAT) in their meat and related products, while some businesses now require tax clearance from informal traders who buy goods above US$1 000.
Finance minister Mthuli Ncube, together with Zimbabwe Revenue Authority (Zimra) introduced the measures to "protect value chain integrity and transparency and to counter unfair competition by informal traders".
The standard VAT increased to 15% from 14,5% effective this month.
Ncube said the VAT is being enforced to allow fair competition.
In a notice to its customers, Texas Chicken said it had been forced to increase beef, chicken, pork and fish prices in line with the introduction of the 15% VAT by the government.
"In line with the gazetting of Statutory Instrument 248 of 2023, all of our meat products now include a 15% VAT component with effect from January 1, 2024," Texas Meats said in the notice.
Koala Park followed suit with their own notice.
According to the new measures, manufacturers can now only sell their goods to wholesalers who are registered for VAT and have tax clearance certificates.
The wholesalers, in turn, only sell their goods to licensed and registered retailers while individuals can only buy goods worth not more than US$1 000 or its Zimdollar equivalent each 30 days.
"Please be advised that with immediate effect, any individual or business wishing to purchase more than US$1 000 (or the equivalent value in ZWL$ or ZAR) within a 30 day period from the N. Richards Group, is required to be a tax-registered operator with Zimra. We look forward to serving you during 2024," a leading wholesaler, N Richards said in a notice.
Beverages manufacturer Delta Beverages issued a similar notice, saying it would collect a surcharge of 30% for any above the standard price for remittances to Zimra for any trader that cannot required tax compliant documents , advising traders that this would apply to sales exceeding US$1 000 per transaction undertaken within a period of 30 days.
Varun Beverages Zimbabwe also issued its own notice saying: "We urge all our commercial partners to regularise their compliance documentation with immediate effect to forestall any disruption in our trading relationships."
Investment analyst Enock Rukarwa said this will cause an increase in prices of goods and services.
"The most direct impact is an increase in the prices of goods and services, which ultimately leads to reduction in consumer purchasing power. Given our highly informalised economy, this measure may increase informalisation as businesses avoid taxation," he said.
Source - newsday
