Consumers back SA’s call to remove VAT on poultry 

By Ntombi Mhlongo

The Eswatini Consumer Association has backed the call by some South African entities that the government should remove Value Added Tax (VAT) on chicken products.

Recently, South African company Astral Foods called on the government to remove VAT on chicken products, arguing that it is producing chicken at a loss.

According to News24, the company argued that its cost of producing a chicken has now exceeded the selling price by E2 per kilogram as unabated load shedding, and rampant feed costs have pushed its expenses to new heights but that it cannot pass on these costs to consumers, who are already battling to make ends meet because of other rising food prices, interest rates, and other living expenses.

Worth noting is that chicken is the number one source of essential protein for millions of households in South Africa who cannot afford many other alternatives. It should be noted that whatever happens in the poultry industry in neighbouring South Africa has an impact on the Kingdom of Eswatini as well.

This is because the Kingdom of Eswatini imports chicken t from South Africa and other countries under the Southern African Customers Union (SACU). In terms of the existing laws in Eswatini, there is a 27 per cent levy imposed on broiler chicken meat and some chicken products imported from outside the SACU countries.

 Furthermore, there is a 15 per cent value-added tax imposed on all poultry imports including processed meat. Imports in Eswatini are governed by the Swaziland Customs and Excise Act of 1971. 

This Act is enforced by the Eswatini Revenue Services (ERS) through its Customs Department. The Act provides that goods entering the South African Customs Union (SACU) area are charged customs duty at the port of entry. 

The Ministry of Agriculture, through National Agricultural Marketing Board (NAMBOARD), is responsible for the clearance levies and excise duty for imports of broiler chicken and products into Eswatini.

Explaining its stance on the call to have the VAT removed, Astral said it proposed that chicken be exempted from VAT in the past. It said that food security in SA is now under threat and that the increasing cost of the average food basket, which includes poultry as a staple protein, has placed many consumers under extreme stress and will continue to do so.

Worth noting is that the SA Poultry Producers (SAPA) have also been calling for removing VAT on chicken products and said most other small and medium-scale farmers would support a call for the zero-rating of poultry feed too.

SAPA argued that removing VAT from feed, even for a limited period, could help lower the cost of producing chicken and thus curb the losses of poultry producers.

Also, some SA political parties have made it known they wanted the bone-in chicken to be zero-VAT rated. The Democratic Alliance, in particular, argued recently saying the fact that the cost of poultry production in SA now exceeds the sale price, dictates that farmers must increase their prices. But consumers cannot afford more price hikes, especially for food staples like chicken. 

In an interview with the Eswatini Financial Times, Eswatini Consumers Association Chairman Bhanyaza Mdluli said the call by the South African entities to scrap the VAT was justified.

Mdluli said, “We are in full support of the call because some of the producers supply major food outlets like Nandos which we also have in the country. The most important thing here is that removing the VAT will not benefit the producers only but the general consumer as well. The producers are struggling and when that happens, they are then forced to hike the prices which then becomes a problem for the consumers”.

He said removing the VAT will help cushion the producers while at the same time ensuring that the consumer does not suffer.

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