Govt explains VAT-free rating

THE Ministry of Finance says the VAT exemption of certain basic food items will not apply to prepared foods that contain these ingredients.

The products that will be tax free from August 1 are fresh and dried beans (excluding canned and frozen beans), sunflower cooking oil, processed animal fat (lard), bread, and bread and cake flour (sifted and unsifted). Maize meal and mahangu are already VAT exempt.In a statement, Finance Permanent Secretary Calle Schlettwein said: “Bread means all types of bread baked and sold as fresh and bread and cake flour means flour made from wheat.”He said the amendment to the VAT Act that made provision for the said items to be zero-rated was published in the Government Gazette on July 15 and will come into effect on August 1.”Businesses are therefore requested to adjust the VAT rate as from August 1 2008 to ensure the zero-rating of the basic foodstuff will benefit the poor in this country,” said Schlettwein.The VAT exemption was passed by Parliament as a way of helping Namibians cope with skyrocketing food prices.Government will lose about N$34 million in revenue due to the decision.Since April this year, food prices have risen by an estimated 30 per cent.Maize meal and mahangu are already VAT exempt.In a statement, Finance Permanent Secretary Calle Schlettwein said: “Bread means all types of bread baked and sold as fresh and bread and cake flour means flour made from wheat.”He said the amendment to the VAT Act that made provision for the said items to be zero-rated was published in the Government Gazette on July 15 and will come into effect on August 1.”Businesses are therefore requested to adjust the VAT rate as from August 1 2008 to ensure the zero-rating of the basic foodstuff will benefit the poor in this country,” said Schlettwein.The VAT exemption was passed by Parliament as a way of helping Namibians cope with skyrocketing food prices.Government will lose about N$34 million in revenue due to the decision.Since April this year, food prices have risen by an estimated 30 per cent.