CZI pokes holes into fuel rebate system

By Pauline Hurungudo

The Confederation of Zimbabwe Industries (CZI) has raised concerns with the Zimbabwe Revenue Authority (Zimra) over the implementation of the fuel rebate system.

Government introduced the rebate system for selected sectors last month to avoid price increases on the back of a massive fuel price increase announced by President Emmerson Mnangagwa.

The relief will be equivalent to the difference between the prevailing rates of excise duty and the rates that were applicable prior to the price increase.

It shall only be applicable to those traders whose prices of goods and services would not have increased relative to the latest change in the price of fuel.

Its beneficiaries should be registered and compliant for tax purposes; be members of recognised business associations; and are able to provide evidence of the productive use of the fuel.

CZI told Zimra that price increases would be unavoidable 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 to those eligible for the benefit.

“In view of the huge increase, depending on the size of the company and the amount of fuel they require, they may have to borrow money to finance the fuel procurement and there are finance costs involved,” said CZI, Zimbabwe’s largest industrial lobby group.

CZI said there is scepticism from industry on the fuel rebate as well because Zimra is currently struggling to meet existing rebates that are due.

“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 of rebates which will affect cash flows,” said CZI, adding that there were also problems with producing evidence of productive use.

“That Zimra would give the taxpayer the onus to prove that the fuel is for productive use is quite useful, but the main challenge arising from this, is on criteria is 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.

CZI has since proposed to Zimra that the rebate mechanism must be easily administered and that the rebate mechanism must not be easily abused.

It has been suggested as well that the rebate mechanism must be such that the taxpayers’ working capital is minimally impacted and that claims must be allowed effective the date of the fuel increase. DailyNews