A Deloitte Zambia tax expert has expressed concern over the content in the goods and service tax bill section 34 which gives descriptive powers to the finance minister Margret Mwanakatwe to waive sales tax contrary to article 199 of the constitution of Zambia.
Speaking during sales tax consultative meeting at Pamodzi hotel in Lusaka on May 6th 2019, Deloitte Senior Tax Manager Kennedy Munyandi said finance minister Margret Mwanakatwe has been given too much power in the sale tax bill.
“The law itself is about 4 pages but the minister has been mentioned at least 15 times and that is already an indication of too much power being given to a person, laws should not depend on the goodness of an individual but be based on data, so the powers given to the minister are too many,” he said.
He added that there is need to raise awareness on the content of the sales tax bill to the business community as it will be implemented soon. The Sales tax meant to replace Value Added Tax – VAT was set for implementation on April 1st 2019 by the Minister of Finance Margarate Mwanakatwe but was later deferred to be implemented on July 1st,2019.
Munyandi said the sales tax extension must be utilized effetely by stakeholders and government to both consult and sensitize the public. He has further welcomed the sales tax bill and reiterated on the need by government to explain the bill to the business community before it takes effect.
Speaking at the same event, Zambia Revenue Authority – ZRA Commissioner General Kingsly Chanda disclosed that following the announcement to abolish the value added tax by government last year, VAT refunds have increased to K1.4 billion per month from the initial K774 million.
Chanda said currently the authority is recording arrears of between K400 Million to K500 Million in VAT refunds. He further explained that government decided to change to sales tax from VAT due to frauds by some multinational companies and over valuation of capital imports.
He added that some companies where demanding double refund on the same certificate leading to a strain on the treasury hence the introduction of sales tax will help remedy some of these challenges. He noted that every tax law is aimed at contributing to the treasury and not working as a cost on the part of government.
ZBT is yet to get the official position of the top 5 Copper Mines who have been the biggest claimants of VAT refunds and will be the highest impacted by this law. The bill is also yet to clarify on what happens to sectors that were initially VAT exempt such as Agriculture, Pharmaceuticals and others.
