Minister Mthuli Ncube announces VAT exemptions and minimal price increases for select basic goods

January 10, 2024
mthuli ncube | Report Focus News
mthuli ncube

The Zimbabwean government has taken significant steps to address rising concerns over price hikes by revising taxes on basic goods, as outlined in the 2024 national budget. In a statement released on Monday night, Zimbabwe’s Minister of Finance, Economic Development, and Investment Promotion, Mthuli Ncube, unveiled a series of measures aimed at mitigating price increases on essential items.

Under the new tax adjustments, some basic goods will be excluded from a 15 percent Value Added Tax (VAT), providing relief to consumers already grappling with the burden of inflation. Minister Ncube emphasized, “Basic food items that include bread, milk, cooking oil, mealie meal, salt, sugar, and flour, are exempt from VAT purposes, hence there should be no price increases (with them).” He further added that additional essential commodities such as meat, rice, bath and laundry soap, washing powder, and toothpaste have been moved to a standard rating, signaling that price increases in these categories should be minimal.

One key aspect of the revised tax measures is the provision that allows retailers to buy directly from manufacturers, provided they possess a valid tax clearance certificate and are VAT registered. This adjustment aims to streamline the supply chain and ensure that retailers can secure essential goods more efficiently.

The decision to revise these taxes followed the formation of a technical committee by the treasury. The committee was tasked with gathering feedback on the new tax measures from business entities operating under the Confederation of Zimbabwe Industries.

Last week, the Zimbabwe Revenue Authority, responsible for collecting taxes and other government revenue streams, introduced new measures that restricted direct procurement from manufacturers to only tax-compliant wholesalers. This move aims to enhance tax compliance and accountability within the supply chain.

The revisions in taxes on basic goods come as a relief to Zimbabweans who have been grappling with the impact of inflation and escalating prices on essential items. The government’s efforts to address these concerns signal a commitment to stabilizing the economy and ensuring access to vital goods for its citizens.

As these tax adjustments take effect, consumers and businesses alike will closely monitor the impact on prices and the overall economic landscape, hoping for a respite from the relentless inflationary pressures.