By Alois Vinga
FINANCE Minister Mthuli Ncube Friday scrapped the payment of Value Added Tax (VAT) on rice imports effectively bowing down to pressure mounted by millers and retailers.
Under new measures enshrined in Statutory Instrument (SI) 15 of 2021, the Treasury boss scrapped duty on various types of 25kg of rice pre-packaged for retail sale.
The decision was made in line with Section 78 of the Value Added Tax Act [Chapter 23:12] and came into effect on the first of May 2021.
“It is hereby notified that the Minister of Finance has made these regulations which may be cited as the Value Added Tax (General) (Amendment) Regulations, 2021 (No.57),” Ncube said in the SI.
“The VAT General Regulations, 2003, published in Statutory Instrument 273 of 2003 are amended in Part 1 of the First Schedule.”
The measures will be applied on pre-packed packages of less than 25kg for retail sale, semi-milled or wholly-milled rice, whether or not polished or glazed.
The development comes after millers and retailers’ groups engaged Ncube after the government’s directive on the payment of duty dating back to 2017.
They argued the policy measures showed lack of policy consistency and violation of earlier exemptions granted by then finance minister, Patrick Chinamasa three years ago.
Chinamasa is now Zanu PF secretary for finance.
The duo maintained no tax can be imposed on a party unless the same is clearly set out in legislation.
They highlighted that under the current laws, rice is exempt from VAT and even the Zimbabwe Revenue Authority (ZIMRA) has not been charging tax.
However, Treasury had contradicted the retailers’ position on the basis the exemptions were aimed at supporting the local packaging industry through promoting repackaging of cheaper bulk rice into smaller units.
The government had argued that the legislation which gave effect to the new measures was promulgated timeously adding taxpayers had the opportunity to seek clarity or raise concerns over any omissions with the Treasury.