Budget: Major blow for car dealers ….as gvt introduces forex import duty

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By Melody Mashaire

There is  major blow for  local car sale owners/dealers  and individuals importing cars as government has proposed introduction of customs duty on motor vehicles in foreign currency, a move designed to  channel foreign currency to productive sectors of the economy.

This is with effect from Friday November 23.

However, those who are physically challenged and those importing commercial vehicles were exempted.

In his 2019 national  budget proposal presentation on Thursday, Finance and Economic Development Minister Mtuli Ncube said This measure would not apply on imports of commercial motor vehicles and vehicles for use by the physically challenged.

“In order to redirect use of scarce foreign currency to the productive sectors of the economy, the Budget proposes that customs duty and all other taxes on imported motor vehicles be levied in foreign currency acceptable as legal tender, with effect from 23 November 2018.

“This measure will, however, not apply on imports of commercial motor vehicles and vehicles for use by the physically challenged,” he said.

Ncube said government had witnessed a surge in the importation of non-productive goods, particularly motor vehicles during 2017 and 2018 period.

“Honourable Members would be aware that Government has, over the years, implemented demand management measures with a view to redirect usage of the scarce foreign currency to productive industries. Such measures include adjustments to the customs duty regime and control of imported goods through the licensing system.

“Despite some success, Government has, during the course of 2017 and 2018, witnessed a surge in the importation of non-productive goods, particularly motor vehicles.

“During the period January to July 2018, the value of imported motor vehicles, which attract customs duty rates of between 40% to 60% exclusive of surtax, amounted to about US$265 million or 23% of total imports, compared to US$112 million during the same period in 2017,” he said.

He however said mechanisms would be put in place for those who bought motor vehicles on or before November 22 and consigned within a period of six weeks.

“However, on compassionate grounds, a transitional mechanism will be put in place to cater for motor vehicles and Designated Goods that were purchased on or before 22 November 2018 and consigned within a maximum period of six weeks.

“The exemption will be granted on the basis of recommendation by ZIMRA and approval by Treasury,” he said.

There has been a proliferation of car sales in the country where the dealers would work in cahoots with illegal forex dealers and import vehicles for resale then ‘burn’ money to pay import duty tax using payment methods like ZIPIT or swipe.

The move will see the promotion of local car manufacturers.

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