The South African Poultry Association (Sapa) has urged the government to remove the 15% value-added tax (VAT) on certain chicken products to make this essential food more affordable for low-income households.
Sapa said in a statement on Thursday that this would benefit struggling families by lowering the cost of the country’s preferred protein and improving accessibility to poultry meat for the most vulnerable citizens.
Head of Sapa’s broiler organisation, Izaak Breitenbach, said VAT-free chicken was a top priority in terms of feeding South Africa.
He said the association planned to submit an application to the government asking it to zero-rate chicken products for VAT by mid-November.
“Poultry production positively impacts South Africa’s food security by providing affordable, nutrient-rich foods, although more can be done – this action follows President Cyril Ramaphosa's indication that the government will expand the list of essential food items exempt from VAT,” Sapa said.
Breitenbach highlighted the significant economic impact of VAT-free chicken.
He forecasts that the poultry industry could expand production materially to meet increased demand.
“The benefit of VAT-free chicken is enormous. We expect a meaningful increase in consumption, giving malnourished people access to nutritious chicken products they previously could not afford,” he said.
“We've been producing affordable chicken for the masses for many years, and we continue working hard to create the conditions necessary to keep delivering on that promise.”
Sapa said it was collaborating with retailers to determine which products were most commonly purchased by low-income households, to ensure the proposal met real consumer needs.
The submission currently notes tertiary products, which include all offal, fresh or frozen, as well as frozen bone-In chicken. The submission will exclude fresh chicken products and value-added products such as crumbed, spiced or marinated cuts.
Breitenbach said similar proposals in 2018 had faced challenges, particularly around the zero-rating of individually quick frozen (IQF) chicken pieces.
“Government concerns about potential abuse of these definitions were noted, and Sapa is working to ensure this submission aligns with regulatory expectations,” the association said.
The cost of zero-rating chicken is estimated to be slightly over R4 billion, which amounts to less than 1.1% of total VAT revenue (R426bn in VAT revenue collected in 2023).
Anti-dumping duties imposed since 2018 have offset some revenue losses, while increased local production and exports would generate additional tax revenue to support the fiscus, Breitenbach added.
Treasury is expected to review the proposal carefully but its final tax decision will likely only be made in February 2025.
“VAT-free chicken can act as a material kick-starter for low-income households, and feed South Africa’s malnourished and impoverished citizens” Breitenbach said.
