Home News Mthuli Ncube delivers bad news to vehicle importers

Mthuli Ncube delivers bad news to vehicle importers

55
0

IMPORTERS of motor vehicles will pay customs duty in foreign currency with effect from today as Government moves to control the surge in the importation on non-productive goods while businesses that price products in forex will be required to pay tax in the same currency.

Announcing revenue enhancing measures in his 2019 National Budget statement in Parliament yesterday, the Minister of Finance and Economic Development, Professor Mthuli Ncube, said the measures were critical in redirecting use of scarce foreign currency to the productive sector and implementation of measures to control imports, which continue to outstrip exports thereby exerting pressure on foreign currency requirements amid a widening trade deficit.

He noted that while such measures have been undertaken in the past few years, Government has, during the course of 2017 and 2018, witnessed a surge in the importation of non-productive goods, particularly motor vehicles.

“In order to redirect use of scarce foreign currency to the productive sectors of the economy, I propose that customs duty on motor vehicles be levied in foreign currency acceptable as legal tender, with effect from 23 November 2018,” said Prof Ncube.

“This measure will, however, not apply on imports of commercial motor vehicles and vehicles for use by the physically challenged. Furthermore, payment of customs duty in foreign currency will also apply on selected goods. This measure will also apply on all import VAT and Surtax.”

He further noted that some businesses were pricing their products in foreign currency but were not remitting tax in the same denomination. Such businesses are taking advantage of the arbitrage opportunities on the informal market.

“In order to contain such practices, I propose to compel companies that collect VAT in United States dollars or any other currency to remit VAT using the same mode of payment. This measure will apply on all other taxes,” said Prof Ncube.

Turning to excise duty on cigarettes, the Minister said the specific rate of excise duty does not relate to market developments, since the price of cigarettes has, in some cases, increased by about 30 percent.

“I, therefore, propose to review excise duty on cigarettes to US$25 per 1000 sticks with effect from 1 December 2018,” he said.

Alluding to the current market developments which have also distorted the fuel market, Prof Ncube said the country’s fuel has become relatively cheaper compared to prices obtaining in the region, a situation which has created an arbitrage opportunity for local consumers and transiting vehicles.

“This arbitrage opportunity has partly contributed to the increase in consumption of fuel products, with volumes for the period January to October 2018, amounting to US$1,29 billion.

“The increase in consumption is clearly unsustainable, considering that the available foreign currency reserves have to be shared among other critical priorities,” said Prof Ncube.

“I, therefore, propose to increase excise duty by seven cents per litre on diesel and paraffin and 6,5 cents on petrol to reduce the arbitrage opportunities. This measure takes effect from 1 December 2018”.

While some taxpayers have been constrained by economic challenges, the Minister said others have deliberately chosen to evade or defer payment of taxes. He noted that in some cases, taxpayers have voluntarily wound up companies and registered new establishments in order to avoid settling the outstanding tax obligations.

“Company directors are, thus, deliberately violating their fiduciary responsibility, hence are contributing to the accumulation of unpaid tax obligations. Such actions constitute negligence, fraud and abuse of authority.

“I, therefore, propose that directors or shareholders of a company that wound up voluntarily in order to avoid payment of the taxes be jointly and severally liable for the tax liability,” he said.

In view of technological advancements that have enabled foreign companies, particularly satellite broadcasters and e-commerce platforms to provide local residents with services from offshore sources, Prof Ncube said this bracket must be subjected to taxation as the activity generating the income was actually paid from a source within Zimbabwe.

— Chronicle

Loading...