Online Reporter
Edgar Vhera
Agriculture Specialist Writer
THE Zimbabwe Revenue Authority (ZIMRA) has dismissed speculation by some farmers that the authority would be collecting annual taxes for all livestock, saying the purported tax was just advice on valuation of their biological assets.
In a recent notice titled: ‘Valuation of livestock for tax purposes,’ Zimra said livestock farmers may elect a valuation method for their livestock to determine the closing value to be included in gross income.
“In terms of Section 8 (1) of the Income Tax Act as read with paragraph 10 (1) of the Second Schedule to the same Act, a farmer is required to include the value of the closing stock as part of gross income.
“This election must be made by the farmer in the first return of income and is subject to approval by the Commissioner,” read the notice.
Approved values remain effective until there is need or reason for the farmer to review them and the reviewed values must be approved by Commissioner, Zimra said.
Livestock includes cattle, sheep, goats, pigs, crocodiles, poultry, horses, ostriches, zebras, among others, and these are further classified into stud and ordinary livestock depending on purpose.
Stud livestock is for breeding purposes, while ordinary livestock is born on the farm or purchased other than for breeding purposes.
The notice had left some smallholder cattle farmers worried that they were being made to pay a new tax to Government.
“We are struggling to feed our families, let alone deal with more Government regulations, that will only add to our financial burden.
“Many communal farmers keep livestock, as their source of income and anything that cuts their income threatens their livelihood,” said a farmer in one social group who requested anonymity.
Zimra head corporate affairs, Mr Francis Chimanda said it was not a tax, but rather a valuation method used to determine the value of closing stock.
“Just like any taxpayer who deals with stock, farmers value their closing stock at the end of the year of assessment, similarly, farmers have always been required to value their livestock closing stock as part of their accounting process.
“The valuation of livestock serves an accounting purpose, enabling farmers to determine their closing stock and prepare accurate financial statements,” he said.
Mr Chimanda said all individuals engaged in trade are required to register for income tax and therefore, farmers who trade in livestock must register for income tax and this provision applies to them.
However, if a farmer is not involved in the business of rearing or buying and selling livestock, this provision does not affect them, he said.
The Zimra commissioner does not dictate the value that farmers must assign to their livestock, instead, farmers are free to choose their preferred valuation method. The valuation exercise serves as a guide for the commissioner during the assessment process and it enables the commissioner to compare the farmer’s determined value of the livestock against predetermined values, ensuring accuracy and consistency in the assessment.
Livestock and Meat Advisory Council executive administrator, Dr Reneth Mano concurred, explaining that the valuation was not a new tax measure to punish farmers, but a general notice to established cooperates in the livestock industry.
“This is not a new tax but Zimra is just clarifying how commercial livestock production companies should determine the value of their animals for tax purposes and this will in no way affect communal farmers.
“Livestock companies registered for corporate tax have been paying capital gains on their biological assets (commercial and stud breeding stock of livestock, parent breeding stock of broiler and layer day old chicks),” Dr Mano said.
