Duty drawbacks and their impact on Zimbabwe export industry.

 

Levious Chiukira

Duty drawback is a refund in payments that were initially collected upon importation of foreign-made goods, raw materials or semi-finished goods and these payments include customs duties, Value added Tax (VAT) and surtax but excluding antidumping duties which could have been paid Customs issues these refunds only when the imported merchandise is either exported or destroyed. Zimbabwe Customs laws administers this duty concession and there are two types of them in Zimbabwe. These are same state duty drawback and industrial drawback. Although most export promotion measures are regarded as prohibited subsidies under the current World Trade Organization (WTO) system, one of the non-prohibited export promotion measures is the duty Drawback.

A duty drawback is an export subsidy determined as a percentage of the tariffs paid on the imported inputs used in its production. There is need to register with Customs to have the formulae approved prior to application for drawback of duty.  As with an export subsidy, a duty drawback will stimulate exports by offsetting the export-restraining effects of tariffs on the imported inputs. A full duty drawback allows export industries to obtain imported inputs at world prices without much considering of preferential rates. Duty drawbacks established are anticipated to lower the cost of importation and, subsequently, to upsurge the exporting firms’ competitiveness both at regional and international level. The duty is refunded by customs using the approved formulae and the exporter has the responsibility to keep records for inspection by customs.  

The most common is the Industrial Drawback of duty which is administered under the Customs and Excise (Industrial Drawbacks) Regulations, 1991. This requires that for an export company to qualify under the duty drawback on export the imported goods should meet the following conditions

(a)  drawback of duty paid on materials contained in goods manufactured in Zimbabwe which are exported unused; and

(b)  a drawback of duty paid on packages and packing material used in the packing or presentation of goods which are manufactured or produced in Zimbabwe and which are exported unused; and

(c)  a drawback, to the extent specified, of the duty paid on materials appearing in the Second Schedule if they are used in repair of the goods specified opposite thereto in that Schedule, and the goods to be repaired are imported temporarily;

(d)  a drawback of duty paid on any waste or scrap resulting from the manufacture in Zimbabwe of goods which are exported unused, if the Commissioner is satisfied that such scrap or waste is of no commercial value or it is destroyed or disposed of in such manner as he directs: as set out in the Act

And for all these cases above to be acceptable the goods or materials are exported within two years from the date on which the duty was paid and no drawback of duty paid shall be allowed in respect of materials which cannot be accounted for to the satisfaction of the Commissioner of Customs. On importation it is a requirement that the importer through the clearing agent shat state to the commissioner of Customs that Drawback of Duty shall be claimed on the imported goods or materials. Without this endorsement it is impossible to qualify for Drawback of Duty.

The drawback of duty is claimed and comes as a refund upon proof that the goods meet the above mentioned conditions.


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