The Ministry of Finance, Economic Development and Investment Promotion has announced measures to enhance tax compliance among beneficiaries of the Value Added Tax (VAT) deferment facility on capital equipment imports.
Finance Minister Mthuli Ncube said the facility that provides cash flow relief to specified sectors, has been abused by some beneficiaries who have failed to honour their VAT obligations upon expiry of the deferment periods.
“Treasury notes with concern, the number of beneficiaries that are not honouring their VAT obligations upon the expiry of the deferment periods thereof,” Ncube said.
As a result, the Treasury decided to withdraw all VAT deferments granted to operators with outstanding VAT payments on tax deferred.
Operators who have defaulted on VAT deferred shall no longer qualify for the facility.
The Minister said no further tax concessions will be granted to operators who have previously failed to honour their VAT obligations on tax deferred, including failure to honour taxes due on other tax heads.
Ncube also reminded importers and trade facilitation agents that the rebate of duty on imported capital equipment for specified industries was incorporated into the National Harmonised System of Tariff Nomenclature, with a 0% customs duty on imported capital equipment, effective July 2022.
The Minister warned that any application for VAT deferment shall be accompanied by a statement from the Commissioner-General confirming that the operator is compliant with their tax obligations, and that a Tax Clearance Certificate will not be accepted as sufficient evidence of tax compliance status.à
“Treasury will not consider applications for Rebate of Duty on importation of capital equipment. The productive sector, Government Ministries, Departments and Agencies should, thus, be guided accordingly,” he said.
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