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SOUTH African maker of washing powder MAQ, Bliss Brands, has decided to cease exports to Zimbabwe after the introduction of a surtax of 40 percent.
South African media say the tax was imposed at the start of August without any prior notification and is being charged on the packaged product, while bulk washing powder exports do not appear to attract the tax.
Jacqueline Jacobs, marketing director for Bliss Brands, on Sunday said the initial tax of 10 percent was suddenly increased to 40 percent.

“We have been exporting to Zimbabwe for at least eight years, and although we have been subjected to surtaxes before, it has never been to this extent,” she said.
Surtax is defined by the Customs and Excise Act (Chapter 23.02) as a duty payable on importation of selected goods. The authority to levy and collect surtax is in terms of the Customs and Excise Act Section 97 and goods that attract Surtax are listed in Statutory Instrument 112 of 2012 as amended.

According to Zimra, goods imported under COMESA and bi-lateral trade agreements between Zimbabwe and Malawi, Zimbabwe and Namibia, Zimbabwe and Botswana and Zimbabwe and Mozambique do not attract surtax.

Goods imported in terms of the bilateral agreement between Zimbabwe and South Africa attract surtax at a rate of 25 percent if the goods are listed in the surtax notice.

Xavier Carim, South African deputy director-general for international trade and economic development in the Department of Trade and Industry, on Sunday confirmed that information from exporters on the surtax on washing powder, cooking oil and laundry soap bars had been received.

“We are assessing how the surtax is being applied,” he said.
Asked if it was not a violation of the Southern African Development Community (Sadc) free trade agreement, he said: “It is a little bit of a grey area.”

The Sadc Protocol on Trade established a free trade area for 15 member countries including South Africa, Botswana, Malawi, Madagascar, Mozambique, Zambia and Zimbabwe. Carim said the agreement disciplined tariffs at the border and there had been no increase in tariffs.

“A surcharge that is applied internally, such as a tax on imports and domestic products, could not be challenged. Even if there is no local production, and the tax is applied equitably, then it would not be a violation of the trade agreement. They may be doing it to generate revenue,” he said.

Perceived discriminatory measures could be taken up through a dispute-settlement process, but he acknowledged it was not effective at the moment.
Jacobs said the company had been exporting at least 200 tonnes per month to Zimbabwe, and had been growing in the market up to now. It had been exporting to other Sadc members without attracting a similar tax.

There has been concern over increasing imports into Zimbabwe, which economists have blamed for suffocating local industry and heightened import bill.
During the just SADC summit two weeks ago, the block’s new chair, President Mugabe urged South Africa to use its highly industrialised status to assist regional member states achieve collective beneficiation and value addition rather that merely treating them as open markets for her products.

Francois Dubbelman of FC Dubbelman & Associates based in Pretoria said South African exporters could lodge an objection with the Sadc desk at the department if they felt they were being discriminated against and that the trade agreement was being violated.

He said it could be a “luxury tax” aimed at increasing revenue for Zimbabwe. No prior notification was necessary for the tax to be introduced. – Chronicle Business/BusinessDay.