Source: SI161 gives legal effect to fuel price adjustment | The Herald August 7, 2019
Golden Sibanda Senior Business Reporter
Government has gazetted Statutory Instrument 161 of 2019, Customs and Excise (Tariff) (Amendment) notice 10, 2019, that gives legal effect to the new fuel and alcohol beverages excise duties announced in the 2019 mid-term budget review statement on Thursday last week.
Finance and Economic Development Minister Professor Mthuli Ncube last week said Government had approved the direct fuel imports facility, in order to minimise disruptions to the production cycle due to the fuel supply gaps.
The new fiscal measures were followed by an increase in fuel prices for of rtgs$9,01 for petrol and rtgs$9,06 for diesel from rtgs$7,55 and rtgs$7,22 respectively.
Said Prof Ncube: “I, therefore, propose to levy excise duty on direct fuel imports in foreign currency at rate of US$0,45 and US$0,40 per litre of petrol and diesel, respectively.”
Statutory Instrument 161 of 2019 pertains to, among others dutiable products, leaded and unleaded petrol whose excise duties were increased from $1,15 per litre to 45 percent with effect from August 2, 2019.
Government also introduced a separate and new excise duty regime for leaded and unleaded petrol imported using free funds for sale in foreign currency, which has been pegged at US45 cents per litre.
Diesel will attract excise duty of 40 percent while diesel imported using free funds for own use or resale in foreign currency will pay excise duty of US40 cents per litre from $0,90 per litre, previously.
SI 161 of 2019 also prescribes excise duty thresholds for power kerosene and other illuminating or heating kerosine of 40 percent, other power kerosene and heating or illuminating kerosene imported using free funds for own use of US40 cents per litre from $0,90 per litre.
“With effect from 2nd August 2019, companies with free funds shall be allowed to import the goods designated in part 11 of the schedule of the customs and excise tariff notice, 2017, published in statutory instrument 53 of 2017, as provided in this section of this notice, with listed codes (fuel) being imported entirely for use in their production processes and pay for the duty in foreign currency,” the notice of last Friday’s Government gazette reads.
The new excise duty regime applies together with a pricing model approved and published by Zimbabwe Energy Regulatory Authority (ZERA), which assumes Full on Board (FoB) prices of US$0,6052 per litre for diesel and US$0,5888 per litre for leaded or blend petrol.
The pricing model is based on an exchange rate of RTGS$7,5 to the United States dollar and prescribes oil company profit margin of up to US$0,4795 per litre of diesel and US$0,4767 per litre of petrol.
In terms of the pricing model fuel dealers are allowed margin of $0,5930 per litre of diesel and $0,5895 per litre of petrol, giving maximum retail prices of RTGS$9,06 per litre of diesel and RTGS$9,01 for petrol.
Meanwhile, the Government has also gazetted another excise duty statutory instrument, 160 of 2019, for alcoholic beverages, which is an optimal mix of Specific and Ad Valorem excise duty structure.
Spirits now attracts 40 percent of ex-factory cost plus $20 per litre of absolute alcohol (LAA), fortified Wines — $4 per litre, unfortified Wines 15 percent of ex-factory cost plus $3,5 per litre. Other fermented beverages $3 per litre whilst opaque beer powder will attract duty of $0,50/kg.