Retailers seek rice tax relief

THE Confederation of Zimbabwe Retailers (CZR) has renewed its urgent appeal to the government to remove VAT on rice to help local retailers compete with the increasing flow of smuggled rice imports.

CZR president Denford Mutashu expressed mounting concerns over the delay in VAT removal, highlighting its negative impact on both retailers and the broader economy.

The tax break was initially approved in a cabinet decision on March 12, this year, which zero-rated VAT on rice and potato seeds. However, the change has yet to be enacted, causing challenges for legitimate retailers facing competition from smuggled rice.

Denford-Mutashu, Confederation of Zimbabwe Retailers president

“This delay has severely impacted retailers, as they are struggling to compete with smuggled rice imports, particularly from South Africa,” Mutashu noted, in a letter dated October 4, 2024, addressed to Finance minister, Mthuli Ncube.

The CZR warned of potential long-term fiscal consequences for Zimbabwe, citing risks of tax revenue losses across multiple tax categories. Smuggled rice, especially from neighbouring South Africa, has saturated the market, threatening the availability of legal products and undermining fair competition.

“Rice is becoming another line that is heavily affected by smuggling,” Mutashu explained, comparing the issue to similar challenges seen with washing powder and second-hand clothing, which have also faced significant smuggling issues in recent years.

The plea from the CZR comes as households struggle with high retail prices, worsened by the ongoing drought and limited grain supply. In many Southern African countries and globally, rice is zero-rated due to its status as a staple food, making its availability critical.

“High retail prices further strain the budgets of many households, exacerbated by the ongoing drought and the limited availability of grains at household levels,” Mutashu said.

The Confederation urged the government to fast-track the implementation of the zero-rated VAT policy on rice as initially approved by the Cabinet, emphasizing the need to support the retail sector and protect consumers’ livelihoods.

“We respectfully request your urgent intervention to ensure the swift implementation of zero-rating VAT on rice,” Mutashu concluded, stressing the importance of aligning Zimbabwe’s tax policies with regional and global norms for essential food items.