Zimra hikes import duty on second-hand vehicles
Zimbabwe will experience a hike in prices of second-hand motor vehicle imports following the effective adoption of a new duty regime starting this month.Government gazetted the reviewed rates under statutory instrument number 148 of 2014 after Finance minister Patrick Chinamasa indicated that second-hand vehicle imports contributed 10 percent of the country’s estimated $4 million import bill in the first half of this year.
The increase in duty, with effect from November 1, has seen passenger motor vehicles with an engine capacity of up to1 500cc go up from 20 percent to 40 percent while double cabs’ duty is from 40 percent to 60 percent.Duty for single cabs and panel vans of a payload exceeding 800kg but not exceeding 1 400kg has gone up from 20 to 40 percent.
This means would-be vehicle owners will bear the brunt of paying more duty as government is capitalising on every revenue head to boost its almost empty coffers.Apart from boosting revenue for the cash-strapped government, the latest duty increase is likely to deal a major blow to most people who aspire to own a car but cannot afford to buy new locally assembled cars.However, Zimbabwe Revenue Authority’s (Zimra) commissioner-general Gershem Pasi said the hike in import duty for imported vehicles was a way of discouraging old vehicles from coming into the country.”Most of them are very cheap in terms of buying them, but the moment they come in they are no spares for these cars anymore. You find that if the vehicle is more than 10 years there are additional surtaxes put on that,” he said in a televised interview.He added that the imposition of more duty was also part of efforts to resuscitate the local motor assembling industry.Zimra announced that overall duty paid is calculated using Value for Duty Purposes which encompasses cost, insurance and freight value plus other incidental charges and expenses incurred in the purchase of the vehicle and its subsequent transportation up to the first port of entry.
The other charges added on the VDP include port handling charges, storage charges and other special handling fees.The charges that are levied are customs duty, surtax and Value Added Tax (VAT).Surtax is only charged on passenger type motor vehicles that are more than five years old at the time of importation.For example, a 2005 sedan with an engine capacity of 1 495cc and valued at $4 000 will now attract total duty of $4 472, according to the duty schedule released by the tax collector.The total payable to Zimra will be customs duty of $2 090, surtax of $1 300 and Value Added Tax of $1 092.A 2001 sedan with an engine capacity of 1 800cc with a value of $5 000 will now attract total duty of $5 074 –
Zimbabweans have been buying used cars from mainly Japan, a situation that worried authorities as more foreign currency was leaving the country for consumptive purposes.
However, the local car assembly industry is in a comatose state while the vehicles produced are priced beyond the reach of many.
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