Kudakwashe Mhundwa and Princess Ncube
Government has granted an export tax relief to registered raw hide merchants, as it moves to reduce the amount of unbeneficiated leather raw materials that are going to waste, according to a Government Gazette published last Friday.
The waiver comes on the back of pleas by players in the industry that Government should consider removing the $0,75 cents per kg surtax on raw hide exports, reserve 40 percent of production for local tanneries, and allow the export of the rest to ensure the country earns foreign currency from some products deemed too small for local tanning.
According to statistics released by the Zimbabwe National Statistics Agency (Zimstat) in 2017, close to 60 percent of Zimbabwe’s raw hides running into millions of kilogrammes went to waste in the year.
The figures indicate that between January and August of 2017, the sector exported only 900 tonnes of processed hides when the estimated production of raw hides annually is about 5 000 tonnes.
Announcing the measure, The Ministry of Finance and Economic Development, however, said the window only applies to (stockpile) amounts of raw hides that are in excess of domestic demand as evidenced by proof of supply by local industry.
“Subject of section 12C of the Value Added Tax Act, export tax relief shall be granted on unbeneficiated hides export by a registered merchant listed in the schedule. The registered merchant shall be issued with an export permit by the minister responsible for agriculture as approved by the minister responsible for industry and commerce. These regulations shall only apply to excess stockpile for a period of twelve months with effect from January 1, 2019, on a biannual basis.
“Unbeneficiated hides that benefit under the relief of export tax provided from these regulations shall be exported through the port of entry nearest to the premises of the registered merchant where the unbeneficiated hides stockpile is held,” said Government.
Government said about nine merchants are registered in terms of the schedule with a total of 236 141 hides and a weight export quota of 5 490 970 kg. Of the nine, the largest company is Koala Park Abattoir with 57 608 hides and an export weight quota of 1 324 984kg.
The Ministry of Lands, Agriculture and Rural Resettlement may be obligated to cancel or suspend the permits issued if the merchant ceases to hold stockpile or fails to comply with any of the provisions of the regulations and requests.
This, however, follows calls by Zimbabwe and her peers within the Comesa region to stop exporting raw hides and scale up efforts in the leather value chain industries in order to benefit from the $130 billion global leather industry.
The Comesa region has huge potential on the supply side of the leather production sector, producing about 11 percent of the livestock globally, and additionally offering a huge market for finished footwear products.