OK raises concerns over 2025 budget tax proposals

Nokuthaba Brita Ncube, [email protected]

RETAIL giant, OK Zimbabwe has expressed concerns that the tax proposals outlined in the 2025 National Budget statement may increase costs and reduce profit margins for certain product lines, particularly alcoholic beverages and deli products.

In its trading update for the half-year ending September 30, 2024, the company highlighted that the new tax measures are likely to drive up operational costs and shrink profit margins on affected product categories.

To navigate these challenges, OK Zimbabwe said the cost optimisation and product diversification would remain central to sustaining growth in the second half of the trading year.

Finance, Economic Development and Investment Promotion Minister, Professor Mthuli Ncube, proposed a review of excise duty on selected alcoholic beverages, including wine and spirits, increasing the rate from US$0,25 per litre to US$0,30 per litre, effective January 1, 2025.

In a move to support local wine production, Minister Ncube also introduced a ring-fenced suspension of duty facility for 100 000 litres of raw wine annually for two years, starting January 2025.

This initiative aims to address the challenges faced by the local wine industry, including limited availability of locally produced raw wine.

To promote competitive equity between ready-to-drink beverages and cordials, Treasury proposed reducing the Special Surtax on Beverages’ Sugar Content from US$0,001 per gramme to US$0,0005 per gramme, also effective January 2025.

Prof Ncube defended the proposed tax measures as necessary for the broader good of the economy, emphasising their role in widening the tax base.

“A wider tax base can provide the Government with the resources needed to invest in infrastructure, education and healthcare, which can stimulate economic growth,” he said.

He added that expanding the tax base would create a more equitable system, ensuring that everyone contributes their fair share while generating increased revenue for critical national investments.