Government has exempted retailers from paying Value Added Tax (VAT) on pre-packed rice under SI 125 of 2021, Business Times can report.
Local retailers have been pushing for an exemption from paying on rice packages of 25 kilogrammes or less, arguing that the decision to order them to pay VAT on rice was undermining the need to foster property rights and the Zimbabwe is open for business mantra enunciated by President Emmerson Mnangagwa.
But, in March this year, Finance and Economic Development Minister, Mthuli Ncube, delivered a fatal blow to retailers when he announced that the Treasury was not in a position to exempt retailers from paying VAT on rice.
Ncube said ZIMRA should continue collecting VAT on rice for periods backdated to 2017.
Now, the government has reneged on its earlier decision.
The Confederation of Zimbabwe Retailers (CZR) has applauded the government’s latest move.
“We are pleased to note the publication of SI 125 of 2021 which specifically sets out that all rice is VAT exempt. The confirmation of the VAT position for rice shows that the government is committed to establishing a private sector led economy in line with the ‘open for business’ policy of His Excellency. We want to thank President Mnangagwa, vice President Constantino Chiwenga, the Minister of Finance (Mthuli) Ncube, the Minister of Trade and Commerce, Sekai Nzenza for listening to retailers and the public and addressing the matter,” CZR president Denford Mutashu said.
He added: “Confirmation that pre-packaged rice is VAT exempt will save many jobs as well as prevent both the informalisation and de-industrialisation of the economy.”
However, Mutashu said there was still ambiguity as far as the effective date was concerned.
He said CZR would continue to engage the Ministry of Finance to address the ambiguity which has been created.
Mutashu said CZR was confident that the government will resolve this, in the interest of business, and in line with His Excellency’s vision.