Proplastics intensifies push for VAT overhaul

PROPLASTICS says it continues to push for the scrapping of the 15 percent value added tax (VAT) on polyvinyl chloride and high-density polyethylene pipes to ensure a level playing field for local producers facing stiff competition from duty-free imported pipes.
The group has been lobbying for VAT exemption for its products, mainly irrigation pipes, for over a year now and nothing has materialized to date.
“Farmers, of course, most of them struggle to get VAT registered and all that stuff. But where they are registered, they can also import those things (pipes), and so, we have lobbied before, and continue to lobby, to say, on our supplies to the agricultural sector, if we could be exempted from VAT,” Proplastics finance director, Paschal Changunda said during a recent tour of the new plant by the minister of Finance, Mthuli Ncube.
“The real reason is to try and level the playing field. When the farmer is not VAT compliant, they cannot claim the VAT so they opt to import.”
Proplastics is one of the companies that extensively supply to the irrigation sector in the country.
With a level playing field, Zimbabwe’s pipe industry can not only fulfil local needs but also contribute positively to the country’s foreign exchange reserves.
Locally produced pipes help save significant foreign exchange.
In 2022, the country imported US$8 million worth of pipes from various sources, despite local manufacturers having the capacity to meet this demand.
The Competition and Tariff Commission (CTC) in its newsletter last year highlighted that the 15 VAT charge on pipes by local manufacturers made them less competitive than imported pipes used in irrigation systems, which are exempt.
It therefore stressed the need to level the playing field by exempting local manufacturers from charging the levy.
Meanwhile, Proplastics has invested US$12 million in a new Harare factory, with plans to expand regionally, starting with Botswana.
“Over the past three years, we have managed to construct a new factory because all the 1965 (the year the company was formed) factories became irrelevant to operations,” Proplastics’ chief executive Kuda Chigiya said.
“We spent some US$7 million and we put in additional money for production and mixing equipment to ensure the integration of the value chain.”
According to Chigiya, the company plans to establish a new production plant in Botswana to capitalise on tariff benefits and economic processing zones.
“We are not in any way going to take any one piece of equipment from Zimbabwe to Botswana — this is a completely new initiative that the business is taking,” Chigiya said.
Proplastics manufactures a wide variety of piping products, including PVC, sewer, electrical conduit, borehole casing, soil waste and vent, Minetuff and polythene pipes.
Proplastics’ annual production is 7 000 tonnes and the company exports to several countries, including Sierra Leone, Mozambique, Tanzania, Malawi, the Democratic Republic of Congo and Zambia.
newsdesk@fingaz.co.zw