Business Development

Rice is Exempt from VAT: Confederation of Zimbabwe Retailers

Denford Mutashu

By Joyce Mukucha

The Confederation Zimbabwe Retailers (CZR) has highlighted it is illegal for Zimra to enforce the collection of value-added tax (VAT) on rice in retrospect since the current law does not provide for it.

The organisation made the statement following the article which was published in the edition of The Standard on 20 December 2020, titled, “Zimra blow for rice dealers”, in which ZIMRA insists on collecting VAT on rice packages of 25kg and below backdated to February 2017.

The VAT exemption for rice was set out in Statutory Instrument (SI) 9 of 2006 which was amended by SI 20 of 2017 with effect from February 1, 2017. Therefore the position, under which rice was standard rated, only remained in force until February 16 2017 when SI 26A of 2017 was published repealing SI 20 of 2017.

In his statement issued on the 21st of December 2020, the CZR President, Denford Mutashu stressed that more importantly, it was morally incorrect to attempt to charge VAT when rice is a staple food as he pointed out that charging will increase the price of this staple food which will affect low-income families.


He indicated that CZR, therefore, notes that ZIMRA’s persistence in collecting VAT on rice and backdating it to February 2017 has serious ramifications

“The effect of the repeal was to restore the position set out in SI 9 of 2016 that all rice (including pre-packed rice in packages or less than 25kg) was VAT exempt.


“The decision by ZIMRA lays bare the need for policy consistency. ZIMRA was quiet for 3 years, not indicating that VAT was to be collected on rice. It is only recently that it has sought to collect the VAT which was previously and still is exempt.


“We wish to point out that it is an established principle of law that no tax can be imposed on a party unless the same is clearly set out in legislation. At present, the law is that rice is exempt from VAT and even the ZIMRA system has not been and is presently not charging VAT,” he said.

Mutashu underscored that effecting the decision was not only a violation of property rights but a direct act on any confidence the business sector had in the economy.

CZR, he highlighted, believes that for Zimbabwean economy to attract both local and foreign investment, there was a need to have the respect for the rule of law and policy consistency.


“As CZR, we state unequivocally that the VAT directive undermines His Excellency President Emmerson Mnangagwa’ pro-business stance enunciated by the “Zimbabwe is Open for Business” mantra.”

He said CZR proposed that there should be continued dialogue between CZR and Government on this issue of national importance to ensure that all stakeholders are complying with the law for benefit of the country.

“As Adam Smith argued in his seminal work, The Wealth of Nations, taxation should follow the four principles of fairness, certainty, convenience, and efficiency,” Mutashu added.

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Byron Adonis Mutingwende