Paying by the letters

16 10 2010

The composted pine bark medium we use for growing seedlings is no longer available in Zimbabwe. The company that used to process it in Mutare has closed down. They claim that the increased cost of sourcing the bark from outlying sawmills (the firm in Mutare where they originally sourced it had closed) was no longer worth what the market would pay for it but I think it was more to do with the manager’s years of drinking catching up with him. Anyway, we can either source the pine bark direct from South Africa at about US$100 per cubic metre or get it from the aforementioned company (who is getting it from the same source) at around $120 per cubic metre. Another “waste” product, coir (the outer husk of a coconut) is also available from Sri Lanka at around $50 per cubic metre but we are having a few problems getting the seedlings to grow properly in it. So we must go with what we know works until we can sort out the “wrinkles”.

I ordered the pine bark from South Africa some 4 weeks ago and making the payment was almost too easy. I simply went to the bank with the invoices, filled in a form and the transfer was made the next day. Bear in mind that in years gone by transferring money to anywhere outside the country was an involved process; the money to be transferred had to be found from the Reserve Bank, applied for, and if you were lucky it went through. It could take weeks. But those days of Zimbabwe dollars are gone now and if you have the money in your account (usually US dollars) and the invoice it’s easy! Well, the transferring bit is easy as I found out.

I rather naively assumed that the transport company I was using out of Jo’burg would sort out the border clearance at Beitbridge. Well, yes they could but it seemed I didn’t have all the right documents. Yes, I did need the import permit that I’d got but I also needed ANOTHER import permit to cover the first import permit. I dashed off to the Ministry of Agriculture and applied for it. By this stage I’d enlisted the help of a clearing agent who knew all the ropes. I’d also discovered that I needed a tax clearance certificate (i.e. I’d paid all the company tax to the Zimbabwe Revenue Authority or ZIMRA) that I needed to over the last 2 years of “dollarization” – that’s US dollarization. Fortunately I was pretty much up to date on that except for a “presumptive tax”. Yes, you read that right but I should explain. We are supposed to guess how much profit the company is going to make and every 3 months pay an estimate of it to ZIMRA. In theory there are penalties for paying too little and at the end of the year it’s supposed to all balance up. It’s a hold over from the Zim dollar days when it was devaluing so fast that any tax paid at the end of the year as most civilized countries do would have been worthless. Well, I’d done nothing for this year so on advice from my bookkeeper I paid a nominal amount in for the first 3 quarters of the year (my bookkeeper was of the opinion that no-one would notice that it had all been paid on the same day). I took all the relevant forms along to an accounting firm that could “organize” for a small fee to fast-track the tax clearance certificate – I was assured it would be the genuine item, it would just take a few days instead of a few weeks to process.

The few days passed and no certificate was forthcoming. It transpired that the Business Partner number (nice phrase isn’t it – partnering the revenue authority. Right.) used to identify my company in all transactions with ZIMRA including the importation of goods did not match my company name. ZIMRA had spelt my company name wrong “Fitwood Farming” instead of “Fitward Farming” (I did not create the name – I bought the company name from an accounting firm some 11 years ago). This was a major snarl up as all the import documents listed my company with the correct spelling. This would have to be corrected and in the meantime the trucking firm would charge me demurrage for the truck that was now waiting at the border. The clearing agents told me it could be cleared without the tax clearance but it would cost me another $1100 in another “presumptive tax”. The alternative was to pay the demurrage at around $300 per day. I paid the $1100 dollars and as I type this the load of pine bark is waiting in the queue to cross to the Zimbabwe side of the border.

If the $1100 really is a presumptive tax it is not too serious – it can be offset against my company tax at the end of the year – although I did not have plans to be paying that much. Yes, it would have been cheaper to pay the $120 per cube for the pine bark in Harare!

Notes: the composted pine bark is normally a waste product of sawmills that strip the bark off the logs before sawing the planks as the bark can clog the blades. This bark is collected, milled into smaller pieces and composted in piles to reduce the acidity and make it suitable as a growing medium. This process usually takes about 3 months depending on the method. The coir we have been exprimenting with is also a waste product from the coir industry in Sri Lanka (and other SE Asian countries). The coir fibres we use are too short to weave into the mats and other products normally made from the coconut husk. It is also composted over several years but unlike pine bark has a natural ability to trap nutrients (usually potassium and magnesium) so has to be washed to make it usuable.

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