Govt adjusts some measures in 2024 Budget

Audrey Galawu

Finance and Investment Promotion Minister Mthuli Ncube has adjusted some of the measures introduced in the 2024 budget after consultations with the Confederation of Zimbabwe Industries.

The Treasury has declared that basic items that include bread, milk, cooking oil, mealie-meal, salt, sugar and flour are exempt from Value Added Tax.

In a statement, Ncube said the price increase for basic commodities was as a result of the re-arrangement of the VAT system where some of the goods have moved from zero rating to exemption.

“The Committee undertook an impact analysis on the implementation of some of the measures introduced through the 2024 Budget, in particular with regards to tax compliance on route to the market, mitigation of consequences of the sugar on health through a special surtax, and a few tariff lines that were omitted on exemption from Value Added Tax, in order to cover the whole value chain that includes cotton and soya seeds to cooking oil.

“Other basic commodities that include meat, rice, bath and laundry soap, washing powder, toothpaste and petroleum jelly have been moved to standard rating, hence, price increases should be minimal,” reads the statement.

The Ministry has also announced that retailers can purchase from manufacturers as long as they have obtained a valid Tax Clearance Certificate and are VAT registered.

However, a five percent Withholding Tax shall be applied to manufactures distributing directly to customers who are not registered for VAT and are not in possession of a valid Tax Clearance Certificate.

Manufacturers have been ordered to continue direct supply to traders in the rural areas.

“Concern was raised with regards to survival of the rural traders, since they are not registered for tax purposes. These traders will however, continue to purchase their goods from wholesalers, hence there will not be any disruption of trade.

“Manufacturers are allowed to sell to institutions such as hotels, schools and other corporations, provided they are registered for VAT and possess a Valid Tax Clearance Certificate.

“Companies that serve online customers are allowed to continue to transact using this method provided they are fiscalised so as to guarantee compliance to the VAT and, in the interest of promoting an environment conducive for healthy and efficient tax collection, local authorities are urged to issue vendors with licenses that are linked to the place of business,” Ncube added.

Bread price in the country had increased with bakers citing the taxes in the 2024 National Budget. Retailers and tuckshops have increased bread prices from US$1 to US$1.20.

Meanwhile, meat prices had also hiked, for instance, Texas Chicken has increased its prices due to the 15% VAT announced in the 2024 budget.