The Zimbabwe Revenue Authority (zimra) has, with effect from yesterday, effected a 10 percent tax on farmers without valid clearance certificates, a move the Ministry of Agriculture says is likely to cause disturbances, especially on the on-going tobacco selling season.
Farmers said the tax was contrary to the five percent export incentive availed by the Reserve Bank of Zimbabwe to tobacco farmers, which would be made redundant as the tax eats more into their income.
Agriculture, Mechanisation and Irrigation Development Minister Dr Joseph Made yesterday said that the measure was unprecedented and not fair on the country’s major foreign currency earners.
He said his ministry was engaging the Ministry of Finance and Economic Development to find how best they could work around the case to ensure a smooth agricultural season.
“As a ministry, we are going to engage the Ministry of Finance and Economic Development because tax deduction cannot be implemented all of a sudden without proper communication to farmers,” he said.
“It has been a good season and tobacco farmers have brought in a good crop. We are going to work on the issue.”
In a circular issued by zimra to the Tobacco Industry and Marketing Board (TIMB) yesterday, the authority instructed the board to comply with the provisions of the notice.
“Please be advised that in terms of Section 82(2) of the Income Tax chapter 23:06 as quoted below:
“Subject to this section, unless a payee furnishes the paying officer with a tax clearance certificate, the paying officer shall withhold 10 percent of each amount payable to the payee under the contract concerned and shall remit each amount withheld to the commissioner on or before the 10th day of the month following that in which the payment was made.
“In this regard, you are requested to comply with the above instruction to withhold 10 percent from each supplier who does not have a valid tax clearance certificate.”
Efforts to contact Finance and Economic Development Minister Patrick Chinamasa to clarify how the farmers would acquire the tax clearance certificate and why the 10 percent levy had not been previously applied were fruitless as his mobile phone went unanswered.
Zimbabwe Tobacco Association representative Mr Casper Mlambo said the move was not fair on tobacco farmers, as they were grappling with a lot of challenges.
“As it stands, tobacco farmers are faced with a lot of challenges,” he said.
“They have to pay Aforestration Levy and other costs. The move will eat into the validity of the growing of the crop, which will dishearten the farmers.
“Tobacco is a major foreign currency earner for the economy. We are saying that the tax should be scrapped.”
Farmers’ unions said the move will disturb production of the crop, which is one of the biggest foreign currency earners that should not be tempered with.
Last year’s tobacco sales reached close to $600 million, contributing about 25 percent of the country’s GDP and this year, $700 million has been mobilised by the buyers to purchase the crop.
Farmers questioned the motive of the tax in light of the five percent export incentive availed by the central bank.
“It’s like they are giving us with one hand and at the same time taking away even more from us with the other hand,” said a tobacco farmer at Tobacco Sales Floor.
“Why impose the tax now, what is the timing? It is farmers who stand to lose and this will discourage us from going for the crop in future, yet it is important to bring in foreign currency. Zimra should consider reversing this move for the benefit of all.”
Efforts to contact Zimra over the imposition of the 10 percent tax were fruitless.-Herald