ZIMBABWE’S livestock producers say a misreading of Section 17 of the Value Added Tax Act (Chapter 23:12) by the Zimbabwe Revenue Authority (Zimra) could soon render the industry non-viable.
Indications are that in some instances the tax collector has demanded tax liabilities of around $500 000 on the basis of the reading of Section 17 of the piece of legislation.
Representative body, the Livestock and Meat Advisory Council, while making submission for the 2018 National Budget, has said it is “concerned by the economic implications of the reclassification of meats from standard VAT to VAT exempt by tax authorities especially as pertains to Section 17 of the VAT Act.”
It explained:
“According to tax authorities Section 17 gives them powers to demand re-imbursement of VAT rebates on the remaining value if inputs as well as capital goods used in the production of the goods that have become exempt.
“It is the opinion of members of the Livestock and Meat Advisory Council that the adjustments called for in Section 17 apply to change in use instigated by the operator and not statutory reclassification of goods from taxable to exempt.”
Indications are that ZIMRA has started to demand VAT reimbursements on remaining asset values on players in the meat industry and across its value chain. Questions sent to ZIMRA were yet to receive responses by the time of publication.
“One company in September received notifications from ZIMRA informing them of tax liabilities based on the variation of goods and capital equipment from zero rating to tax exempt amounting to $500 000 and a final demand has been issued.
“Another company received similar demands amounting to $25 000 early last month. If these orders are effected these company operations would be severely compromised,” said LMAC.
According to the council, following the repealing of Statutory Instrument 20 of 2017 by Statutory Instrument 26A of 2017 meats including that of bovine animals, swine, and edible offals of animals and fish, which were previously standard rated (charged tax at 15 percent) became exempted from VAT. — BH24