Zimbabwe Revenue Authority (ZIMRA) is collecting 15% value-added tax (VAT) on rice which was scraped on 25 kilograms and below backdated to February 2017.
ZIMRA was quiet for 3 years not indicating that VAT was to be collected on rice and it is only recently that it has sought to collect VAT which is still on an exemption.
The VAT exemption for rice was gazetted in Statutory Instrument (SI) 9 of 2006 which was amended by SI 20 of 2017 with effect from February 1 2017, in that regard, rice was standard rated, only remained in force until February 16 2017 when SI 26A of 2017 was published repealing SI 20 of 2017.
Confederation of Zimbabwe Retailers (CZR) President Denford Mutashu pointed 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 exempted from VAT and even the ZIMRA system has not been and is not presently charging VAT.
“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 respect for the rule of law and policy consistency,” Mutashu said.
The VAT directive undermines President Emmerson Mnangagwa’s pro-business stance articulated by the “Zimbabwe is Open for Business” mantra.
“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,” Mutashu said.
This issue is a cause of concern therefore, CZR is going to engage with the government and ensure that all stakeholders are complying with the law for the benefit of the country.
The persistence by ZIMRA on collecting VAT on rice has got several implications and these may cause rice dealers to run out of business as the amount total up to millions of United States Dollars.
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