VAT HEADACHE: UBOMBO SUGAR TO GROWERS’ ‘RESCUE’

MBABANE – Ubombo Sugar has taken it upon itself to ensure that sugar cane growers, from whom it sources some of its cane supply, thrive in the business by addressing challenges they are faced with.

Taxation, in particular Value Added Tax (VAT), has been identified as one of the threats to the survival of many small scale sugar cane growers. This has necessitated collaboration between Ubombo Sugar and the Eswatini Revenue Authority (ERS) to engage the growers and capacitate them on the subject matter. Worth noting is that the Ubombo Sugar mill sources about 30 per cent of its cane supply from smallholder farmers. These farmers are situated in Siphofaneni and surrounding areas.

Engagement

Ubombo Sugar, working with the ERS brought the farmers together in a three-day engagement which was recently held at the Phum’lamcashi Community Training Centre in Siphofaneni, where they were taken through VAT processes. This is as per a correspondence shared to this publication. Addressing the farmers, Ubombo Sugar’s Tax Specialist Nsizwa Mutasa explained that the meeting was a beginning of many other engagements which will benefit not only the growers but the company as well.
He said if growers were unable to comply with their VAT obligations, their sustainability got affected and this would have a detrimental impact on the mill’s cane supply. However, he emphasised to growers that the VAT inclusive payments received from the company for the supply of cane must be remitted, having taken into account all allowable VAT claims on expenses incurred and through a process which required returns to be submitted on a monthly, quarterly or annual basis, depending on the registration status of the grower. He further explained that the company, in collaboration with the ERS, introduced a VAT reverse charge mechanism to make things easier for the farmers and lessen the compliance burden.

Payments

Though this would mean payments made to growers would be exclusive of VAT, it did not prevent growers from claiming VAT incurred on expenses incurred where the necessary requirements were met. He noted that there were still challenges as many farmers were still unable to comply with their VAT requirements, hence the decision to bring them together and deliberate on the matter further. The farmers were separated into three groups and the engagements occurred over a three-day period; from Tuesday to Thursday, to ensure compliance with COVID-19 regulations. Also speaking at the meeting, ERS Director - Communications Vusie Dlamini said the revenue authority had a mandate to ensure that taxpayers understood their tax obligations, hence the numerous engagements with stakeholder groups in the various sectors of the economy.

He noted that even though there were other tax challenges the growers were facing, the biggest one at the present moment, was VAT. As a result, the focus of the engagement was on VAT. He committed that the engagements would continue with a view to address other tax issues that the cane growers needed assistance with. “We do a lot of engagements with various taxpayer groups and what we appreciate is coming back and finding that the taxpayers have better understanding of tax than they did before,” he said. 

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