‘Bureau Veritas must be paid locally’

‘Bureau Veritas must be paid locally’
Zimbabwe National Chamber of Commerce CEO, Chris Mugaga

Zimbabwe National Chamber of Commerce CEO, Chris Mugaga

BUREAU Veritas, the French firm awarded a contract by government to administer a consignment-based conformity assessment (CBCA) programme last year, must be paid through the real time gross settlement system (RTGS) by importers to reduce foreign currency outflows, the Zimbabwe National Chamber of Commerce (ZNCC) has said.
The country’s second largest business lobby group wrote to government on October 9, in a follow up to a series of lobbies to the State after registering its misgivings on the programme, which was imposed on importers two years ago.
In its submission to the Ministry of Finance and Economic Development ahead of the 2018 national budget expected later this month, ZNCC reiterated its position that CBCA was replete with inordinate delays at border posts.
These delays were behind the high cost of imported goods, the business lobby noted in the report obtained by The Financial Gazette.
The French firm was assigned to ensure that the quality of products imported into Zimbabwe met minimum safety, health and quality standards.
In August, Veritas said it had rejected $182 million worth of sub-standard goods destined for Zimbabwe since its launch in 2015.
But ZNCC’s submission revealed that opposition to the firm remains strong, with the business lobby group warning that huge amounts of scarce foreign currency was being paid to Veritas by frail firms, even as they battled a liquidity crisis.
“The consignment-based conformity assessment programme must be reviewed,” ZNCC said in the one-page paper, which suggested a range of tax reforms.
“It has an impact of delaying shipments and increasing costs since international suppliers charge business for the inspections and, as a nation, we have lost millions in foreign currency since all payments for inspections go outside the country. There is also need to make it possible for business to pay for the service locally… via RTGS and save foreign currency. Each invoice for goods on the inspection list that is paid outside the country has inspection fees added to it,” ZNCC said.
It said formal businesses had come under pressure from the informal sector, which was this week said by an economist to be controlling $17 billion.
This sector has not been paying taxes.
“Government should pursue a progressive and equitable tax regime that seeks to protect established businesses from informal and unregistered businesses that do not contribute to the fiscus,” said ZNCC.
“Business is of the view that duty on solar batteries must be removed. Solar panels and solar inverters all attract zero percent duty and these do not work without solar batteries which still attract 20 percent duty. To fully promote the use of solar energy this 20 percent duty must be scrapped. There are delays by withholding (Value Added Tax) VAT agents in giving certificates after withholding money from business.
“This is creating cash flow challenges for business as it is forced to pay VAT for the invoice in full if the certificate has not been received yet two to three (percent) of the VAT would already have been withheld by the agent. The budget must address this and make it punishable if the certificate is not issued within seven days and where there are delays there must be an office that business should escalate to.
“Employment costs must be reduced. The wage bill needs to be addressed as a matter of urgency and government needs to act on ghost workers. Government should stop leakages in parastatals by adequately supporting the implementation of the auditor general’s 2014, 2015 and 2016 recommendations,” the paper said.
Tax issues were at the centre of national debate this week.
Officiating at an International Monetary Fund event on Monday, Reserve Bank of Zimbabwe deputy governor, Jesimen Chipika said government was navigating through a tight fiscal terrain.
She said it was difficult for the State to hike taxes, as firms were already struggling.
“We cannot increase tax levels, they are already high,” Chipika said.
“We cannot continue to tax the current economy that we have, it is overtaxed.
“Our economy has to diversify. We cannot continue running primary industries,” Chipika added.
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