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Edgar Vhera

Agriculture Specialist Writer

THE Government may be losing millions of dollars in potential revenue on live animal sales as most unregistered butcheries are not collecting the 15 percent value added tax (VAT) on behalf of the Zimbabwe Revenue Authority (ZIMRA).

Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube introduced a standard tax of 15 percent on live animals among other products with effect from January 1 this year when he delivered the 2024 national budget.

“I, therefore, propose to limit VAT exemptions to medicines and medical services, goods for use by the physically challenged, sanitary wear, fuel and fuel products, agricultural inputs, implements and produce (excluding live animals, groundnuts, cotton seed, soya beans and products thereof), wheat (excluding bread), milk and salt. 

“The remaining goods and services would, thus, be standard rated and for ease of administration, the above measures will be implemented with effect from January 1, 2024,” he said.

Livestock and Meat Advisory Council (LMAC) executive administrator, Dr Reneth Mano said the introduction of VAT on live animals had resulted in many abattoirs not directly buying cattle from farmers, but offering toll slaughtering services.

“Farmers bring their cattle for toll slaughtering, pay the charge for the services and then look for their own buyers for the carcass. Most independent butcheries who purchase the meat are not registered with ZIMRA for VAT collection and lack tax clearance certificates and therefore not collecting or remitting tax revenue to Government,” he said.

LMAC recognises that these informal meat traders are buying cattle from desperate farmers seeking money, slaughter them on slaughter poles or under trees without the knowledge or involvement of veterinary officers, livestock inspectors and meat graders stationed at every licenced commercial abattoir to certify that the animal is healthy and meat is purple marked as being safe for human consumption.

Dr Mano said: “The way in which the new ZIMRA taxes on live animal sales and meat are being handled is completely counter-productive, retrogressive and putting the urban consumers of beef in grave danger of buying cheap beef from informal traders, which has not been certified by Government inspectors as safe for human consumption.”

Zimbabwe Abattoirs Association (ZAA) chairman, Mr Dumisani Murindagomo concurred saying traders were slaughtering cattle under trees, with the meat transported in car boots for illegal sale in buckets in urban areas.

“Some farmers are toll slaughtering and selling to unregistered butcheries to avoid VAT payment, which has disrupted the beef value chain. The Government will not get the VAT as many of the beasts are being slaughtered outside the system,” he said.

Abattoirs are instructed to collect the 15 percent VAT and five percent presumptive tax on all butcheries or informal traders buying meat, but some have no valid ZIMRA tax clearance, while the 30 percent withholding tax as might be necessary.

CSC-Boustead Beef Zimbabwe consultant, Mr Reginald Shoko, said better collection of VAT was possible if it was to be done at wholesale and not farmer level.

“As CSC, we are not wholesaling meat, but offering toll slaughtering services to farmers at very low costs. Once we start wholesaling, we will collect tax for ZIMRA from meat sales,” Mr Shoko said. 

Meanwhile, Mr Shoko said farmers have heeded the Government’s call to destock herds through the sale of unproductive animals to purchase feed and save productive ones such as breeding class, heifers, cows and those for draft power.

Farmers’ actions to destock to avoid losses due to the El Nino-induced drought have resulted in over supply of cattle to abattoirs, which has seen some suspending slaughtering. The resultant glut has led to some abattoirs going beyond the stipulated 72 hours of animal stay before slaughter while farmers are making frantic efforts to transport their animals from remote areas to major towns such as Harare, Masvingo and Bulawayo in search of better prices.

Ordinarily, Zimbabwe’s urban consumers have an expressed demand for about 60 000 tonnes of beef or 370 000 heads of mostly economy and commercial grades of slaughter cattle per year provided beef retail price is within US$4, 50 to US$6, 50 per kilogramme.