Cottco seeks tax relief

Source: Cottco seeks tax relief | The Herald September 26, 2019

Cottco seeks tax relief

Ellen Chasokela Herald Reporter
The Cotton Company of Zimbabwe Limited (Cottco) has appealed to Government to be exempted from other taxes as they are    constraining the company.

This came out recently when the company’s managing director Mr Pious Manamike appeared before the Parliamentary Portfolio Committee on Lands, Agriculture, Climate, Water and Rural Resettlement chaired by Cde Justice Mayor Wadyajena, for the pre-budget consultative meeting.

Mr Manamike said the 2 percent tax is constraining the company’s cash flows and the increasing interest rates will burden the company with additional costs.

“Tobacco farmers were granted an exemption from this requirement, but the act has remained silent on the Cotton farmer. Last year, Cottco made an appeal for cotton farmers to be exempted from 10 percent withholding tax and is still waiting for a response.

“Withholding tax is held when making a payment to a contractor for an amount totalling or aggregating to $8 000 or more over a year of assessment (previous the amount was $1 000).

“Cottco appreciates the initiatives to remove the 2 percent tax on transactions involving farmers, but seeks removal of the same in the rest of its business transactions given that the company pays all its other tax heads,’’ he said .

Mr Manamike said that they were also seeking exemption from import duty concessions.

“Cottco provides wool packs to farmers in order for them to deliver uncontaminated cotton to its ginneries.

“This guarantees the quality required for exports,” he said.

“We also import grain bags and both products are made from jute only grown in India.

“We are being charged duty at 15 percent on these imports and incurring costs running into millions of dollars on importation.

“With plans to increase cotton production, Cottco’s ginneries are in desperate need of an upgrade. To this end, we also seek exemption of duty on all ginnery spares (currently duties of up to 40 percent) Mr Manamike added that there was need to resuscitate the textile sector.

“The value addition chain from cotton to clothing is currently crippled because the sector is unable to access long-term funding at a sustainable costs to retool the sector.’’

He added: “We are proposing special funding for the revival of this sector. By value adding lint to yarn, the country would be able to double its foreign currency earnings.

“Cottco is working on value addition projects (aimed) at increasing local employment like irrigated cotton farming, value addition: from cotton to clothing and oil extraction from ginned seed (focusing on communities were cotton grown).