Zambia’s agro players want reduction on fuel VAT

Fuel dispencer21 August 2013, Lusaka – Stakeholders in the Zambian agriculture sector have called for a six per cent reduction in Value Added Tax, VAT, on fuel in the 2014 national budget, to mitigate the high cost of the commodity and help minimise operational costs.

The stakeholders who include the Zambia National Farmers Union, ZNFU, Grain Traders Association of Zambia, GTA, and Millers Association of Zambia, MAZ, have proposed to government to reduce VAT from the current 16 per cent to 10 per cent. According to a joint statement released in Lusaka, the move would help to reduce the cost of maize meal and wheat and further minimise the cost of distributing products to remote parts of the country and make them readily available.

Although VAT reduction would result in Government’s loss of revenue, ZNFU believes that the loss would be offset by overall reduction in cost of production, increased investment in productive sectors which are expected to create jobs and revenue for Government.

Stakeholders also proposed that Government should consider reducing company tax from the current 35 per cent to 25 per cent for the food value chain companies to attract investment in the country.

Currently, food processing companies were charged company tax on their taxable profits at 35 per cent.

They said whilst appreciating the current reduced rate of 10 per cent enjoyed on primary agriculture profits, Government should consider recognising the special nature of food value chain and attracting more investment in the sector to enhance food security by reducing the company tax rate for agro-processing and handling to 25 per cent.

The statement said “This measure will also be in line with Government’s policy of encouraging value addition.

Government should consider reducing the company tax rate for the food value chain agro-processing and handling profits to 25 per cent instead of the current 35 per cent, to attract investment in the country.”

They stated that if both existing and potential investors are encouraged to increase investment in the country, it would result in higher economic growth, with associated employment creation and reduced poverty.

It said that this would also generate more revenue for Government in terms of Pay-As-You Earn, PAYE, and consumption taxes due to the increased levels of consumption.

“The lower rate could also lead to increased voluntary compliance and investments which will come into this sector as a result of implementing this measure will offset the loss of revenue by Government,” reads the statement.

ZNFU said it was aware of the fact that undertaking the above measure would have revenue implications on the part of Government.

ZNFU said it understood that the agriculture sector had to make concessions to ensure that there was a balance between revenue losses by Government and also that, measures to recover revenue losses are put in place.

– Judith Namutowe, Times of Zambia

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