Zimra, CZR escalate rice tax standoff
THE Confederation of Zimbabwe Retailers (CZR) has maintained that the Zimbabwe Revenues Authority (Zimra) is failing to interpret laws in its move to charge 15% value added tax (VAT) on rice packaged in 25kg bags and below retrospectively from February 2017.
This week’s comments by CZR were the latest of a series of exchanges between the two sides after the retailers came out guns blazing two weeks ago, slamming the tax collectors for undermining business confidence by adding more taxes on economic players.
The CZR warned that Zimra’s controversial move confirmed government’s lack of clear and consistent policies, which it said might affect millions of low-income earners who were depending on imported rice.
Most of the rice is imported by wholesalers and retailers, who are members of the CZR. Following the outcry by CRZ, Zimra last week said that rice traders were failing to track the changes taking place on the taxation of the product.
“The challenge appears to befrom failure to track the changes with respect to specific tariff headings. The VAT status of rice should not be generalised but should be specific to tariff codes,” Zimra said in a statement.
Zimra said the amendment of VAT regulations clearly showed the category of rice that is standard rated and that is zero rated.
Rice packed in quantities less than 25kg is standard rated in general except for broken rice, the authority said in its statement clarifying why it would be backdating
VAT on rice.
On Monday, the CZR fired back, disputing the tax collectors’ assertion saying its move was lawful.
CZR president Denford Mutashu ( pictured) said they had noted the legal basis Zimra was relying on to collect VAT but “advised that we respectfully disagree with the basis Zimra relies upon.”
“The Statutory Instrument (SI) 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. The effect of the repeal was to restore the position set out in SI 9 of 2016 that the rice tariffs in query (including pre-packed rice in packages of less than 25kg) was VAT exempt,” he said.
“It’s the same basis on which margarine, maheu and potatoes were and are currently VAT exempt,” said Mutashu.
He called for further dialogue between the two parties to reach common ground.
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 turned down 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.