Boka Auction Floors Zimbabwe has approached Finance minister Mthuli Ncube, requesting government to exempt them from paying the intermediated money transfer tax (IMMT) as it is eating into their revenues, the company’s MD Chido Nyakudya has said.
Nyakudya said the company, which now handles close to 10% of the national crop while commanding close to 15% of the market share, is prepared to receive tobacco at its auction floors next Wednesday when the marketing season commences, but want a tax exemption.
“For the farmers to be able to conduct their sales, the merchant needs to bring the money into the country,” she said.
“The money needs to be transferred to us (auction floors) and we have to pay the growers.
“In 2018, we handled US$70 million on behalf of merchants and growers.
“Our revenue is less than 7% of this, and if you calculate 2% of the $70million, it is a really big chunk of our revenue.
“So, what we have requested is that the 2% tax be exempted on transactions between us and tobacco growers and we have presented this to the Ministry of Finance through our regulator Tobacco Industry and Marketing Board (TIMB). We are waiting for their response”.
Zimbabwe Tobacco Association (ZTA) chief executive Rodney Ambrose, added that the IMMT was going to negatively affect the price of tobacco.
“It is unfortunate that we are going to feel the heat of the 2% tax, every business is going to pass the 2% tax on farmers,” he said.
“We think the merchants are going to drop the price of tobacco by 2% in order to cover for it.”
Meanwhile, Ambrose said tobacco farmers were happy with the special arrangement on access to foreign currency that has been put in place by the central bank.
“We met Reserve Bank of Zimbabwe governor John Mangudya and he agreed to give us an unlimited access to our forex retentions after it was limited to 30 days in the monetary policy statement,” he said.
“Another issue we are happy about is that the central bank this year has promised us 50% nostro accounts based on net of United States dollar sales.
“This following other incentives that we have been receiving over the years For example, in 2017, we received 5%,in 2018 it was 12.5%.”
TIMB chief executive Andrew Matibiri said the regulator had licenced over 40 tobacco buyers and 32 contract buyers and registered close to 172 000 growers.
“In terms of preparedness of the 2019 marketing season, we have licensed over 40 buyers, but the number is likely to increase as some of them are yet to finalise registration requirements,” he said.
“Thirty-two contract buyers have been licensed to buy from tobacco contract farmers and the number of growers registered is 172 000.”
It is expected that the tobacco marketing season will help ease foreign currency shortages in the country, albeit temporarily.