Smuggling of fuel into Zimbabwe in huge volumes has reached unprecedented levels, hampering government ability to collect taxes and shortchanging consumers as they pay for poor quality fuel that has potential to damage their vehicles, the energy sector regulator has said.
The Zimbabwe Energy Regulatory Authority (ZERA) CEO Addington Mazambani said despite efforts by tax and law enforcement agents to stop the scourge, the cartels engaged in smuggling of fuel have become a menace and threat to economic development.
While it is easy to import fuel into Zimbabwe, legal imports are subjected to excise duties and the smugglers have set up schemes to enable fuel imports without paying, boosting their profits in the process.
Other taxes and levies, such as the carbon tax, ZINARA levy, and debt redemption tax, are imposed on imported fuel in addition to excise duty.
Some smugglers are known to declare fuel entering Zimbabwe as being in transit and not subject to excise duties because the paperwork indicates the fuel will not be used or sold in Zimbabwe.However, the fuel is offloaded in Zimbabwe by the smugglers, who either use it or sell it here. It is understood that in certain cases, the tanker is filled back up with water, sealed, and the water is declared as diesel at the next border to finish the acquittal procedure and enter Zambia or any other neighbouring nation.
Taxes do not apply to goods that are in transit.
Mazambani said the rate of delinquency has skyrocketed and warned the fuel smuggling syndicates that ZERA would be merciless.
“We are experiencing a lot of fuel smuggling into the country giving unfair competition. We will be ruthless in cancelling offenders’ licences,” he warned.
He also warned dishonest dealers saying: “It’s a sector we have allowed to grow and it’s now an area (sector) where some elements are in to clean their money.”
It comes at a time when ZIMRA, country’s tax collector, is fighting a fuel smuggling ring that includes clearing agents, transporters, and some of its own officers who have a habit of falsifying fuel quantities and descriptions. This was acknowledged in ZIMRA’s latest report.
It has been reported that some unscrupulous fuel dealers are mixing diesel with paraffin, taking advantage of paraffin’s low price and the fact that paraffin, regarded as a basic commodity, was exempt from duty and levies.This has been giving ZERA serious headaches.
In addition to the government losing out on possible revenue, consumers suffer because they have to pay more for fuel that is of lower quality, which could harm their cars.
Apparently, Mazambani revealed that six service stations nationwide have been prosecuted for selling tainted and blended fuel under the false pretence of being unleaded, breaking standard operating procedures, and misleading motorists.
