BLANKET smuggling is on the rise, with Chinese importers listing blankets as quilting kits, to pay a lower duty at the country’s ports of entry.
BY TATIRA ZWINOIRA
According to documents provided to NewsDay from a source yesterday, a number of Chinese companies have resorted to this modus operandi to pay a lower duty, as it has a different tax code.
Statutory Instrument 19 of 2016 removed blankets from the open import licence and requires importers to have permits.
As such, these come with a tax code requiring importers to pay 40% of value imported, $2,50 per kilogramme and 15% value-added tax (VAT), which are measures to deter blanket imports.
Since the goods are listed as quilting kits, Chinese blanket importers pay 10% of the value imported, $1,45 per kilogramme and VAT of 10%.
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Due to this loophole, Chinese blanket importers are bringing these blankets in 44-foot trailers, which should cost a duty of about $70 000 considering weight, but are paying between $4 000 and $6 000 instead.
Quilting kits are listed in the base form of the blankets that is fabric, compressed fibre, and sewing thread. NewsDay was shown a sample by a source, which is basically a semi-finished blanket that only needs stitching to be completed.
The source said this also implied the Zimbabwe Revenue Authority (Zimra) border officials were complicit in the smuggling, since they were allowing blankets to pass through as quilting kits despite being noticeably the former.
“They do not declare the right commodity, price, quantity and pay between $4 500 and $5 000 for goods in a 44 foot container costing millions in revenue,” the source said.
In one of the documents, there is a letter from Zimra to one of the Chinese companies, Redbart Enterprises, raising questions over the company’s import practices from January 2011 to October 31, 2016 concerning the quantity and value of their imports during this period. Industry and Commerce minister Mike Bimha confirmed yesterday there were loopholes in blanket importing.
“I find it difficult that we continue to import blankets. I think that it is something that we have the capacity to do (produce) ourselves. I also think there are a lot of loopholes and that we can do better. Importing for the sake of importing is not something that we want as a ministry. We want to support our local industry,” he said during a tour of Waverley Blanket factory. Bimha was accompanied by legislators from the parliamentary portfolio committee on Industry and ministry officials.
He promised to step up efforts to improve border technologies to curb smuggling.
Zimbabwe Textile Manufacturers Association secretary general Raymond Huni said the association’s investigations unearthed the smuggling. The investigations were called for by blanket manufacturers.
“We conduct yearly reviews on all the textile companies in the country to review their capacity. In the second week of March till the second week of April (last week) we discovered the practice of underwriting (under declaring) the value of blankets by blanket importers was being done,” he said adding that the association has since engaged the ministry of Industry and Commerce.