15% VAT ON DAIRY PRODUCTS KICKS IN TODAY

MBABANE - While consumers have welcomed the drop in fuel prices, the bad news is that any snack from a dairy product will come with a value added tax (VAT) in its pricing as of today, which has led to the consumers and retailers seeing red.

The introduction of the VAT, which is at 15 per cent, is subsequent to the VAT Amendment Act, 2022, which was assented to by His Majesty King Mswati III on May 12, 2022. The Act amended the VAT Act of 2011 and a notice by the Minister of Finance, Neal Rijkenberg, said it should come into effect on July 15, 2022. Some retailers stated that they received letters from the Eswatini Revenue Service (ERS), informing them that as of today, they were to effect the VAT on dairy products such as yoghurt, ice cream, cheese (soft and hard), dairy snacks, DanUp, drinking yoghurt (Yogi Sip), custard, soft serve and honey.

Bemoaned

This, they bemoaned, was short notice, given that they had to update their software to incorporate the VAT on the goods that were now falling into standard rate while up until yesterday, they were zero-rated. It is worth noting that the supply of dairy products, being milk of all kinds; fermented milk, emasi, buttermilk, fresh or UHT cream or sour cream; yorghut, sip, buttermilk powder; condensed milk, powdered milk and milk substitutes (e.g. cremora etc); baby milk formulas, ice cream and other edible ice, mixtures and dairy blends; butter and margarine; whey cheese (cheddar, gouda or other) and curd; honey (natural or artificial) were listed under zero-rated and services. This means that all these goods were not included in the list of the items that needed to pay the VAT. Subsequent to the information that these goods shall now need consumers to pay VAT for them, President of the Swaziland Consumer Forum (SWACOF) Mandla Ntshakala said they were shocked by these developments.

He said their shock was born from the expectation that the price of crude oil had been low for the better part of the month, which created anticipation that prices of commodities would drop as well. “Instead of having more items placed under VAT, we expected government to come through for us and half the percentage of VAT as the cost of living has escalated dramatically due to geo-politics,” Ntshakala said.

Cushion

He said their anticipation was that during these challenging times, government would cushion consumers by minimising the VAT to 7.5  per cent until things stabilised in the markets.
Ntshakala said in addition to the escalating cost of living, many people had lost employment during the pandemic, while minors became orphans. This, he said, was too much on consumers as they were stretched with added responsibilities. He said the country was also promoting the agriculture sector to maximise the value chain and some farmers had started producing products like yoghurt. The SWACOF president said the introduction of the VAT could lead to local farmers making lesser sales from their volumes which would spiral to unemployment. He said government was trying to solve one challenge by creating other challenges. It is worth noting that a week ago, this publication reported that Eswatini Electricity Company (EEC) received an instrument effecting VAT on all electricity purchases, save for domestic users, effective today as well.

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