Finance Minister Dr. Bwalya N’gandu has been challenged to cancel all skewed colonial tax treaties, some of which were signed before independence and include the need for a programmed or periodic review of all double taxation agreements in place.
Zambia has been noted to be among the developing countries in Africa which have signed one way tax treaties with developed countries which have frequently led to massive revenue losses for the country from the exploitation of its massive God endowed mineral wealth and other resources.
The Zambian government confirmed that it had begun to review some of the Double Taxation Agreements – DTA’s with countries such as Netherland and Ireland. But a review conducted by the Zambian Business Times in conjunction with Action Aid has revealed that this is one of the major high risk high return areas that the country needs to attend to.
There are some countries in Europe and North America that should particularly be reviewed as they are being used as conduits for transfer pricing and profit repatriation. Zambia still has some agreements that date back to as far as 1959. There government has enough technocrats that can review all these agreements and ensure that only those that are in the collective interest of Zambia are retained.
ActionAid Zambia has since expressed disappointment at such unfair agreements which carve up taxing rights and impose more limitations on the taxing rights of developing countries than on the taxing rights of developed countries.
Sometimes we heap the blame on the Zambia Revenue Authority, but its the Ministry of Finance that issues and get tax policies ratified by the National Assembly. This review therefore should be done by the ministry of Finance and related bodies like Attorney Generals office.
And ActionAid Zambia Tax specialist Musonda Kabinga told the Zambian Business Times – ZBT in an exclusive interview that resources that Zambia is losing through poor tax treaties should instead be channeled to funding Zambia’s development agenda and for poverty reduction measures.
He said agreements which were signed before or soon after Zambia gained independence are based on outdated models hence the need to review and renegotiate outdated treaties to ensure Zambia’s right to tax is not unfairly constrained.
“In order to raise more investment for the government to deliver effective public services delivery, we recommend that government should review and redraft all outdated agreements signed before Zambia got independence and should ensure that any tax treaty entered into does not include MANDATORY BINDING ARBITRATION,” He said.
He added that DTA’s should also be negotiated transparently and ratified by parliament with draft versions available for public discussion prior to signing off.
The Zambian Government recently cancelled its Double Tax Agreement with Mauritius and ActionAid Zambia welcomed the move saying it provided for 0 Percent Withholding Tax (WHT) on technical fees paid for technical services and had lost the country millions of dollars in taxes.
As students of history, we can fully appreciate that colonial and protectorate status meant that the laws were crafted in favor of the colonial masters and their interests. How do we surely have these treaties still in place today?. We now need to balance the laws to allow the country to have a credible shot at national development which needs infrustrature drive to be re-energized.
