Mthuli Goes After Leather Sector Tax Relief Abusers

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By Alois Vinga

FINANCE Minister Mthuli Ncube has given the leather sector tax relief beneficiaries 30 days to furnish him with details on tangible achievements made so far saying failure to do so will result in them paying the exempted taxes.

Under Statutory Instrument 4 of 2021, shoe manufacturers will be required to furnish Treasury with an annual report showing full particulars of all the benefits achieved in the utilisation of the rebate facility.

“The report shall be in such a manner that the effect on the following aspects on the manufacturer’s business can show the incremental employment levels achieved by the manufacturer and capacity utilisation levels attained from the use of the rebate,” reads the SI in part.

Shoe manufacturers are required to provide details on the value of new investment received since the implementation of the rebate, growth in the manufacturer’s output, research and development initiatives carried out by the manufacturer.

Since 2017, the government granted tax relief which exempted shoe manufacturers from paying duty on raw material imports in a bid to bolster productivity in the sector, create jobs and generate foreign currency through exports.

Market watchers believe that the rebate facility was abused with major beneficiaries having nothing to show for it despite the economy being deprived of due revenue.

Under the new measures, Ncube said due payments where the facility’s abuse is unearthed will be demanded.

“If a manufacturer fails to produce the annual report, the rebate shall be immediately withdrawn and any rebated goods received by the manufacturer during the period when the report was not so produced shall be deemed to have been used for a purpose other than that for which the rebate was granted.

“The manufacturer shall be required to pay the rebated revenue forthwith and the penalty for failure to keep records,” Ncube said.

The annual report by the manufacturer shall be submitted within 30 days from the end of the 12 month period calculated from the 1st day of January 2021 in the first year and thereafter from the 1st of January every year subsequently.