Confederation of Zimbabwe Retailers (CZR) is against Zimbabwe Revenue Authority’s (Zimra) planned actions of collecting Value Added Tax (VAT) on rice stating that the statutory instrument (SI) that allowed the taxing of 25kg and below of the grain was repealed.
Value Added Tax (VAT) is an indirect tax on consumption, charged on the supply of taxable goods and services according to Zimra.
The government insists on collecting a 15% value-added tax (VAT) on rice packages of 25kg and below backdated to February 2017 according to media reports.
CZR president Denford Mutahsu says, “The VAT exemption for rice was set out in Statutory Instrument (SI) 9 of 2006 which was amended by SI 20 of 2017 with effect from February 1 2017. Therefore the position, 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 all rice (including pre-packed rice in packages or less than 25kg) was VAT exempt.”
CZR says the ZIMRA’s persistence on collecting VAT on rice has serious ramifications and in particular policy consistency, confidence in Zimbabwe’s business sector and also on the legality of the issue.
“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 says.
“Effecting the decision is not only a violation of property rights but a direct act on any confidence the business sector had in the economy. We believe that for this economy to attract both local and foreign investment there is a need to have the respect for the rule of law and policy consistency.”
“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 does 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,” went on Mutashu.
Besides CZR, Confederation of Zimbabwe Industries and Consumer Council of Zimbabwe have also aired their views against paying on rice in the media respectively arguing that such actions will ruin the industry’s cash flow and also that industry will simply pass on the costs to the consumers most of whom are already struggling to put food on the table.
Mutashu said, “As CZR we, therefore, propose that there be continued dialogue between CZR and Government on this issue of national importance to ensure that all stakeholders are complying with the law for benefit of the country.”
