‘Zero-rate lease finance VAT’

GOVERNMENT has been urged to zero-rate the value added tax (VAT) on lease finance for farmers to access equipment to boost production and become competitive.
The Zambia National Farmers’ Union (ZNFU) has also called on Government to zero-rate VAT on barley, lower the cost of production and improve the competitiveness of barley production.
In its budget submission for 2015, ZNFU says certain farm equipment and machinery such as tractors under 90-horse power are zero-rated on VAT.
“Tractors under 90-horse power should be zero-rated to improve productivity of small-scale and emergent farmers. Government should consider treating the lease as if it were an outright sale where VAT is zero-rated,” the submission reads.
ZNFU says charging VAT at 16 percent on leases disadvantages farmers and makes access to mechanisation even more difficult.
It says zero-rating VAT on lease finance would help in mechanising the agriculture sector by making it cheap as well as encouraging players to invest in tractor mechanisation and other equipment to improve their efficiency and competitiveness.
The ZNFU, however, says implementing the measure would result in revenue loss.
The lost revenue would, however, be regained through increased collections on corporate taxes, and presumptive taxes due to improved productivity.
On zero-rating VAT on barley, ZNFU says it would give incentive for investors to invest in local processing which would result in diversification of winter crops and export of malt, hence creating jobs and revenue for the government.
The union has also called on Government to zero-rate VAT on maize value chain to make the production of the staple food competitive and affordable to consumers.
It says since the VAT status of maize changed from zero-rating to exempt, the food value chain suppliers have been suffering the input VAT paid on the production of maize, mealie-meal, bran, thereby making the growing of maize and maize products expensive.
“The government should consider to VAT zero-rate the inputs that are used in the production of maize and its products, which should include seed, fuel, grain bags ,chemicals, electricity farming and milling equipment spares,” the statement reads.

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