Tobacco sector asks for exempt status

Thu, 20 Jul 2017 09:57:45 +0000

By MAILESI BANDA

TOBACCO should be moved from the current standard rated VAT status to an exempt status if the crop is to be competitive in the region, Tobacco Association of Zambia consultant Phonto Mumbi has said.

Mr. Mumbi said for the tobacco industry to be competitive, there was need for the crop to have similar taxing like other countries in the region.

Making his proposals to the 2018 national budget, he said the government should commit to making the sector competitive to promote job creation and improve livelihoods for the rural communities.

“For the tobacco industry to succeed we need to have a tax exempt status like other neighboring countries and this will help us compete favorable on the market,” said Mr Mumbi.

He proposed that the crop is moved from the standard rated status to an exempt status.

 “The taxation of tobacco is in various stages and we are the smallest market in the region making it challenging for us to flourish. Our major customers are multinationals and they are part of the international buying community that look at southern Africa as one market,” he said.

He explained that the Zambian market which was the smallest operated on a system that was not economically friendly for the business due to the taxing system, adding that having a VAT exempt status would help in the growth of the sector. Mr Mumbi said that in the tobacco value chain the Southern African region was a mirror image of each other, adding that the proposal was to make the sector competitive.  He said the investment into a cigarette manufacturing plant by the British American Tobacco company in the Lusaka South Multi Economic Facility Zone was an opportunity for growth in the sector.

“We need to come up with plans and ways of feeding the sector plant with tobacco for production because if we cannot meet the capacity, they will be forced to import the raw materials then the jobs and the taxes will go to other countries,” he said.

Last month, the Ministry of Finance announced that stakeholders should bring submissions of the 2018 national budget which is expected to be presented to Parliament in October 2017.