Government will now refund businesses for extra costs incurred in buying fuel at new prices that became effective on January 13, raising expectations that this might positively impact on prices, it has been learnt.
The rebates for excise duty on fuel — which cover the manufacturing, agriculture, mining and transport sectors — were announced through Statutory Instrument (SI) 72 of 2019 on Friday.
They will be backdated to January this year.
Government hiked the price of fuel by 150 percent in order to prevent arbitrage, where fuel was offloaded on the parallel market, and to tame the disproportionate demand for the commodity.
The new provisions prescribe deterrent penalties for fraudulent claims.
Confederation of Zimbabwe Industries (CZI) president Mr Sifelani Jabangwe said the new law is “a step in the right direction”.
“This is something that we had been waiting for. Discussions on this matter started in January when we engaged with Government on the impact of the fuel hike on industry. This is certainly a step in the right direction and a very welcome move for the manufacturing sector,” he said.
“During our meetings with Government, it was emphasised that the fuel hike would only marginally contribute to price increases. So it would make sense that if manufacturers benefit from the rebate facility, they can also reduce their prices, albeit marginally.”
Transport operators also said development provides scope for companies to reduce fares.
Zimbabwe Transport Organisation chair and director of CAG buses Mr Samson Nhanhanga said the main challenge was ensuring that fuel becomes readily available.
“We welcome the rebate, but the ball is now in Government’s court. If fuel is readily available for our buses, we will effectively make use of the refunds and transmit the reduction of costs to the consumer. However, the problem is that we are experiencing challenges in fuel supply.”
SI 72 limits refunds to beneficiaries that do not have outstanding tax liabilities, and in instances where such tax liabilities exist, Zimra will deduct the debt and refund whatever amount would be left.
Furthermore, application for rebates — which will be made through Form Ex FRF 2 — will only be made by companies that are duly registered and have tax clearance certificates, invoice or receipts from fuel suppliers, and documented proof or productive use of the fuel.
The Zimbabwe Revenue Authority (Zimra) will insist on serialised numbers and dates on which receipt or invoice is issued, name and address of the Zimbabwe Energy Regulatory Authority (Zera) licence number and address of recipient of the fuel, quantity of fuel supplied and vehicle registrations.
In addition, the reimbursement claim for fuel “must be submitted by the 10th day in the month following that of purchase of the fuel”, while “the validity of the invoice shall fall within the period of claim”. But those who try to cheat the system will be punished heavily.
“Any person who provides false information in connection with the provisions of these regulations shall be guilty of an offence and liable to a fine not exceeding level 7 or imprisonment for a period not exceeding six months or both such a fine and imprisonment,” reads part of SI 72.
In January, President Mnangagwa noted that the rebate system, which was meant to insulate industry from the fuel price hike, would prevent wanton price increases.
“Cognisant of the need to prevent generalised price increases for goods and services in the country, with the attendant hardships which that will entail, especially to the commuting workforce, Government has decided to grant a rebate to all registered business entities in manufacturing, mining, commerce, agriculture and transport sectors,” he said.
Similarly, permanent secretary in the Ministry of Finance and Economic Development Mr George Guvamatanga recently told The Sunday Mail that the intervention would prevent businesses from raising prices of basic commodities and critical services.