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AfricaeconomyZimbabwe

Zimra’s persistence on collecting Rice VAT pose serious ramifications

By Almot Maqolo

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The Confederation of Zimbabwe Retailers (CZR) wants continued dialogue with the Government on this issue of national importance to ensure that all stakeholders are complying with the law for benefit of the country.

This comes as the Zimbabwe Revenue Authority (ZIMRA) insists on collecting Value Added Tax (VAT), on rice packages of 25kg and below backdated to February 2017.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. 

So 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 President Denford Mutashu said ZIMRA’s persistence on collecting VAT on rice and backdating it to February 2017 has serious ramifications.
He said the decision by ZIMRA lays bare the need for policy consistency. 

“ZIMRA was quiet for 3 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,” he said.

Effecting the decision, Mutashu said, 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. As CZR, we state unequivocally that the VAT directive undermines His Excellency President Emmerson Mnangagwa’ pro-business stance enunciated by the “Zimbabwe is Open for Business” mantra.”

He noted 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.”


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