The illicit cigarette business is now causing trouble for the tobacco producer, Zimbabwe.
Finance Minister; Mthuli Ncube raised worry that the illicit tobacco trade is resulting in evasion of taxes in Zimbabwe.
Consumers get cigarettes from informal traders including tuck shops and street vendors, who are not as monitored as large supermarkets. This makes it possible for companies to produce cigarettes to sale directly to the street vendors evading taxes.
Registered companies however accuse counterfeit producers for the illicit business.
Ncube last week proposed the monitoring of cigarettes production in manufacturing companies.
He said “In view of the threats posed to revenue, I propose sealing of the production counters of individual production machines.”
“This (monitoring production of cigarettes) will enhance the monitoring and enforcement mechanism, whereby the Zimbabwe Revenue Authority tallies production to specific duties.”
Countries have always been monitoring the production of cigarettes main to reduce the the supply of tobacco due to health concerns.
The Minister also proposed the destruction policy to smuggled cigarettes.
“Locally produced cigarettes are smuggled mainly into neighbouring countries, hence, the majority of seizures of illicit cigarettes are local brands,” he said.
“I, therefore, propose to introduce a destruction policy, whereby all confiscated illicit cigarettes are destroyed in a closely monitored process, with effect from 1 August 2022.”
Other taxes evaded through the illicit cigarettes include corporate income tax, value added tax and excise duty.
South African authorities have always been facing a challenge of cigarettes smuggled from Zimbabwe infiltrating evading taxes.
Every year hundreds of people are said to be arrested in South Africa for trafficking the illicit cigarettes. In April this year, Limpopo police intercepted a contraband of cigarettes worth R1, 7 million that had been smuggled from Zimbabwe and was being transported inland South Africa in four vehicles.
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