ZNCC urges review of FTAs, tax relief for companies

ZNCC urges review of FTAs, tax relief for companies

HARARE, November 17 (The Source) – Zimbabwe needs  to review its free trade agreements with regional countries and enforce rules of origin regulations for imports as part of efforts to protect local companies, an industry body has said.

In a pre-budget paper to government, the Zimbabwe National Chamber of Commerce on Tuesday said some countries were opening up their borders on free trade agreements but subsidising their local products – rendering foreign products uncompetitive.

“We then face challenges in accessing these markets. As Zimbabwe, we need to look into such issues as we sign these free trade agreements,” said ZNCC.

Zimbabwe is a member of the Southern Africa Development Community Free Trade Area and also of the Common Market for East and Southern Africa (Comesa) and has several bilateral agreements.

The industry lobby group added that there was need to ensure that the national tax collector, Zimra, has capacity to verify whether imports from the region satisfy certificate of origin conditions under trade agreements.

“Otherwise, goods which do not qualify may come in at the low preferential duty rates thus making our local products uncompetitive,” the chamber said.

Commenting on the promulgation of statutory instruments, ZNCC said the budget process was losing credibility because more than half of budget proposals were never gazetted and made into law.

“Where it is done, it will be way into the year. A case in point is that of the $8 million collected under the tobacco reforestation levy which cannot be disbursed because there is no Statutory Instrument. We therefore propose that relevant Statutory Instruments be issued before the beginning of the budget year,” said ZNCC.

Cumbersome and costly approval procedures for rebates make it near impossible for businesses to benefit from available tax incentives, it added.

In some cases Zimra was refusing to offer rebates to companies that would have received approvals from line ministries and called for a one-stop-shop for rebate processing.

“Delays at border posts, roadblocks, permit processing, among many other non-tariff barriers are increasing the cost of doing business. They have actually become worse than tariffs. There is need for upgrading of border facilities, reducing the number of road blocks and decentralising permit processing,” said ZNCC.

The chamber also proposed that the amendments to the Customs and Excise Act 23:02 in the 2015 Budget announcement – which raised excise tax rate on cigarettes from $15 to $20 per thousand cigarettes for both imported and locally manufactured cigarettes – be maintained for a further two years or until 2018 to allow the industry to recover volumes and address the affordability constraints faced by consumers.

“A review of the excise rate thereafter, it is suggested, will be informed by the economic imperatives applicable to the sector prevailing then,” added the chamber.