Backdated VAT: Wholesaler threatens retrenchments

July 8, 2021

BUSINESS REPORTER

Zimbabwe’s largest wholesaler N Richards has threatened to halt expansion plans and retrench if it is forced to pay ZWL$30m backdated Value Added Tax (VAT) on rice of 25kg and below, Business Times can report.

Wholesalers and retailers and the Ministry of Finance and Economic Development are  loggerheads after Treasury insisted that VAT should be paid backdated to 2017.

The retailers said it is impossible for them to collect the backdated VAT since they had not levied it and that the same Ministry had given them a reprieve not to pay the tax head which means they cannot collect the VAT on future sales.

In a letter to Confederation of Zimbabwe Retailers (CZR) president Denford Mutashu, N Richards Group said should ZIMRA persist in its approach, it means that “we are unable to continue our business as a going concern”.

“Our ongoing expansion projects will be also be negatively impacted and we will be forced to halt construction which will make our future as a business uncertain and we will lose opportunities to grow,” the wholesaler wrote in a letter dated June 21, 2021.

The wholesaler has nine branches countrywide and employs 417. It said the financial hit will force the company to take special measures to avoid retrenchments or may have to “retrench some employees due to operational reasons”.

“This would have knock on effects on their livelihoods and those of their dependents,” it said.

Observers said Thursday the predicament faced by the wholesaler is the same faced by other players in the whole rice value chain. The threat by N Richards has jolted CZR into action.

In a letter to Finance minister Mthuli Ncube, said N Richards supports the entire value chain of both traders and manufacturers and there will be devastating effects were the wholesaler downsizes.

He said while CZR was mindful that government needed revenue  due to the pandemic, raising it through the current assessments will do “more harm than good” for the economy and had short and long term ramifications.

Mutashu said CZR and Grain Millers Association of Zimbabwe will marshal resources from the private sector to support the government fight pandemic, once the tax matter has been resolved.

“We will engage members who would have benefitted through the amended Statutory Instrument to possibly put funds towards the procurement of vaccines and/or PPEs to create a win-win between government and business,” he wrote in a letter dated July 8.

Local businesses have been by the Covid-19 pandemic which has resulted in shorter working hours as part of measures put in place by government to contain the spread of the virus.

 

 

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