Zim poultry producers burdened by VAT on inputs, capital investment

Zim poultry producers burdened by VAT on inputs, capital investment

BULAWAYO, May 23 (The Source) – The Zimbabwe Revenue Authority (ZIMRA) has instructed chicken abattoirs to pay 15 percent value-added-tax (VAT) on all inputs, including capital investments used in broiler production, post statutory instrument (SI) 26A of 2017.

On February 1 2017, government imposed 15 percent VAT on all meat products and cereals under Statutory Instrument 20 of 2017, triggering an immediate increase in the prices of most basic foodstuffs, as retailers passed the cost on to consumers.

Finance Minister Patrick Chinamasa did suspend the tax following an outcry, but poultry industry players say Zimra has come back for another pound of flesh.

Zimbabwe Poultry Association (ZPA) chairperson Solomon Zawe revealed in an industry update that demand for broiler meat was negatively affected by the introduction of VAT of 15 percent on meats during February.

“Prior to this, broiler meat was zero rated for VAT purposes. Although this was later changed to VAT exempt through SI 26A of 2017, the industry remains under strain as VAT exemption implies poultry abattoirs cannot reclaim VAT charged on inputs, maintaining upward pressure on cost of production,” Zawe said.

“In addition, ZIMRA has instructed chicken abattoirs to pay VAT on all inputs, including capital investments, used in broiler production post SI 26A,” he said.

Meanwhile, Zawe said cash shortages continue to curtail demand especially in the informal live markets where cash sales were the norm.

He revealed that reports of illegal imports of chicken offals – gizzards, heads, feet – continue to be received despite government imposing a duty of $1,50 per kilogramme on imported chicken in 2012 in a bid to protect local producers.

As such, ZPA and its sister organisations under the Livestock and Meat Advisory Council were in the process of setting up an anonymous tip-off initiative to try to curb proliferation of illegal imports, he said.