Zim losing $36m in Vat annually

HARARE - Zimbabwe is losing over $100 000 in revenue daily — approximately $36 million annually — due to failure by citizens to claim Value Added Tax (Vat) refunds from South Africa (SA), the Zimbabwe Cross Border Traders Association (ZCBTA) said.

SA is Zimbabwe’s biggest trading partner, with trade between the two reaching R19,2 billion in 2011, compared with R16,5 billion the previous year and R14,8 billion in 2009.

Augustine Tawanda, ZCBTA secretary general, said government should engage South African authorities in order to work out a more trader-friendly mechanism to facilitate recoupment of significant revenue.

“Zimbabwe is losing lots of revenue because its citizens are failing to claim Vat refunds from its main trading partner South Africa for goods which are exported out of SA,” Tawanda said.

ZCBTA, has over 7 000 members and supports the regional tourist market by exporting art and craft products, which normally end up in SA where there is a ready market.

Tawanda said in association’s members continued to pay duty for products despite the law of origin within the Sadc member states exempting member countries from paying taxes.

“These are wholly originating goods according to both Sadc and bilateral protocol rules yet traders are charged duty for these products. It should be noted that there is an element of discriminating the poor and marginalisation because similar exports by corporate curio players are exempted from paying duty,” he said.

“We strongly recommended that steps be urgently taken to start implementing Simplified Trade Regime at bilateral level to facilitate trade by cross-border traders.”

Last week, cross border traders applauded the launch of the Comesa simplified trade regime between Zimbabwe and Malawi, expected to better working relations between the two countries.

The regime allows traders to import and export goods on the common list of products valued below or at $1 000 duty-free and reduces paperwork required by customs departments to just one form.

Tawanda also noted that the government was losing significant revenue to corrupt officials at border posts, which could be collected if small-scale traders were given an opportunity to register at any Zimbabwe Revenue Authority (Zimra) office by paying a reasonably priced fee in order to get a trader’s permit.

A trader’s permit gives cross border traders specific rights and obligations.

“The biggest challenge traders face in eking a livelihood is lack of loan finance hence the sector relies on internally generated savings, where loans are given the rates of interest being charged are usurious,” he said.

Mainstreaming of small-scale traders, said Tawanda, is an economic imperative yet there are no incentives for institutionalisation because benefits concessions which are negotiated through the advocacy of ZCBTA accrue to members and non-members.

“This affects sustainability because there are no incentives informal traders to become organised.”

Finance minister Tendai Biti recently conceded that the economy was highly informalised and said there was need to incorporate the informal sector as a way of ratifying over $4 billion circulating outside the normal banking system.

Zimbabwe’s unemployment rate is around 80 percent with the majority of the people earning a living in the informal sector.

It is estimated that over 300 000 people rely on cross border trading for a living. - Business Writer

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