JOHANNESBURG — South African maker of washing powder MAQ, Bliss Brands, has decided to cease exports to Zimbabwe after the introduction of a surtax of 40%.
The tax was imposed at the start of August without any prior notification.
The tax is 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% was suddenly increased to 40%. “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.”
Xavier Carim, 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.”
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.
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.