Industry raises alarm over fuel rebate

THE Confederation of Zimbabwe Industries (CZI) has raised a number of concerns to the Zimbabwe Revenue Authority (ZIMRA) regarding the implementation of the fuel rebate system proposed by government.
In a paper to the tax collector, the CZI proposed that the rebate mechanism must be easily administered; not be open to abuse; that taxpayers’ working capital is minimally impacted; and that claims must be allowed effective the date of the fuel increase.
Concerns raised during the consultations include impact of the development to non-beneficial companies.
“The raising of product prices as a result of the fuel increase is difficult to avoid regardless of the rebate as some service providers cannot access or may not qualify to access the rebate and will just pass on the cost,” said CZI.
The industry mother body raised the issue of cost of finance during the consultations. In view of the huge increase in the price of fuel, depending on the size of the company and the amount of fuel they require, they may have to borrow money to finance fuel procurement and there are finance costs involved.
“Non-payment by ZIMRA was also raised as the tax collector is currently struggling to meet existing rebates, hence there is skepticism on the fuel rebate as well,” said CZI.
This rebate is premised on the basis that it shall only be applicable to those traders whose prices of goods and services should not have increased relative to the latest change in the price of fuel.
It will also be applicable to traders who are registered and compliant for tax purposes and those who are members of recognised business associations.
The traders also have to provide evidence of the productive use of the fuel.
“Concern was raised about the timeframe for rebate payment by ZIMRA in view of the cost pressures. Fears are that there may be delays in processing rebates, which will affect cash flows,” CZI said.
ZIMRA would give the taxpayer the onus to prove that the fuel is for productive use, but the main challenge arising from this is on the criteria to be used to prove that indeed the purpose of the fuel is productive in nature.
“There is need for emphasis on having a framework of this criteria. However, the criteria should be flexible, recognising that each company or business is different,” CZI said.
Government is working on modalities to grant tax rebates across all sectors to prevent price hikes following fuel price increases. The price of petrol rose from around $1,34 per litre to $3,31 per litre while that of diesel increased to $3,11 from $1,29 per litre a fortnight ago.
“The relief to business through the rebate is expected to be equivalent to the difference between the prevailing rates of excise duty and the rates that were applicable prior to this change,” said CZI.
CZI said by addressing the concerns raised, the proposed fuel rebate system would benefit business, industry, consumers, ZIMRA and the economy.
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