Tough rebate conditions for firms 

Source: Tough rebate conditions for firms | The Herald 12 AUG, 2019

Tough rebate conditions for firms
Prof Ncube

Business Reporter
Beneficiaries of electrical manufacturers rebate facilities will have to provide full particulars of all the benefits achieved in the use of the facility, failure to do which shall see the rebate immediately withdrawn and a penalty imposed, according to a Government Gazette published last Friday.

In his 2019 Mid-Term Budget Review Statement, Finance and Economic Development Minister Mthuli Ncube, added several inputs to the list of electrical components that can be imported duty free.

The inputs will be used for the manufacture of electrical appliances. However, in adding new components, Government now requires beneficiaries to prove that the facilities were put to good use and not abused. Government inserted additional regulations in terms of section 235, as read with section 120 of the Customs and Excise Act (Chapter 23:02). The new regulations, which are with effect from January 1, 2019, now require beneficiaries, “to present to the Minister of Finance and Economic Development, an annual report in a form approved by the Minister, showing full particulars of all the benefits achieved in the utilisation of the rebate facility granted in terms of these regulations”.

The report is expected to be in a manner that can ascertain or account, to the satisfaction of the Minister: the incremental employment levels achieved by the manufacturer; capacity utilisation levels attained from the use of rebate; value of the new investment received since the employment of the rebate; growth in the manufacturer’s output; and research and development initiatives carried out by the manufacturer.

“If a manufacturer fails to produce the annual report in a manner approved in terms of subsection (1), the rebate shall be immediately withdrawn and any rebated goods received by the manufacturer during the period when the report was not so produced shall be deemed to have been used for a purpose other than that for which the rebate was granted.

“The manufacturer shall be required to pay the rebated revenue forthwith and the penalty for failure to keep records,” reads the Government Gazette.

The annual report by manufacturers shall be submitted within 30 days from the end of the 12 months’ period calculated from the effective date of these regulations in the first year and thereafter from January 1 every year subsequently.

The amended regulations for the electrical manufacturers, under SI 378 of 1999, has a list of goods eligible for rebate such as resin, plastic handles, steel pipes, cable clips, electric fans among others.

Zimbabwe National Chamber of Commerce chief executive office Christopher Mugaga is, however, on record saying such a move is nothing short of rent seeking.

“This is another way of stifling enterprise development, because there are many factors that are involved in running a business. A manufacturer might receive the rebate but other factors such as the cost of production might increase and prevent the company from employing more or increasing its output.”

“In some cases, the rebate will help the company survive economic turbulences but according to the regulations it would have failed. There are many factors and outcomes from a rebate, which might not be part of the new regulations but would have been good for the company, like an improvement in the quality of product or of competition,” said Mr Mugaga.