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The Zimbabwe government has scrapped tax on raw hides exports with effect from January this year in a move that is expected to boost viability of abattoirs and the leather industry.
Finance Minister Patrick Chinamasa announced the decision in a an article published in the government gazette on February 6.
The government had introduced U.S$0.75 per kilogram tax on unprocessed animal hides in January last year as part of tax measures to boost government revenue.
In a government announced Statutory Instrument, Chinamasa said the tax relief will only apply to registered merchants and he listed nine merchants with a total export quota of over 2 million kg as among the beneficiaries.
“Subject to section 12C of the Value Added Tax, export relief shall be granted on unbeneficiated hides exported by a registered merchant issued with an export permit by the Minister of Agriculture as approved by the Minister responsible of industry and Commerce.”
Chinamasa said the relief shall not exceed the maximum quantities prescribed for each individual exporter while the unbeneficiated hides shall be exported through the port of entry nearest to the stockpile of the raw hides.
In its 2014 report, the Livestock and Meat Advisory Council voiced concern over the tax, saying it was negatively impacting on the viability of abattoirs.
“Of particular concern is the quantum of the tax at U.S$0.75 cents per kilogram which effectively constitutes a ban on exports of raw hides and skins of all animals,” said the Council in the report.
It added that due to the tax, hides were stock-piling at abattoirs causing significant loss of income for operators.
“A key problem is that due to lack of finance: tanners are unable to buy raw hides from abattoirs while abattoirs are unable to pay tanners for them to custom tan on their behalf,” it said.