BDO hosts high-level 2025 budget analysis

In its quest to continue providing a formidable platform for public discourse, BDO Zambia held a high-level 2025 National Budget Analysis where key economic players among them businesses, institutions, and government officials came together to analyze the K217 billion budget.

Speaking at the event attended by the Zambian Business Times (ZBT), BDO Zambia Director of Tax Advisory Services Katrina Mabika said the event was in cognizant of exploring the financial strategies and economic policies that were mentioned in the budget by the Minister of Finance Dr. Situmbeko Musokotwane.

“We extend a special welcome to our colleagues from the Zambia Revenue Authority (ZRA) and the Ministry of Finance and National Planning, your presence emphasizes the importance of collaboration between the public and private sector, and we appreciate your commitment to fostering transparency and dialogue. The 2025 budget is designed to promote economic recovery and inclusive growth, overall the tax measures are meant to support sustainable businesses, while businesses may face higher taxes, there are opportunities in renewable energy and simplified trade, as we discuss the budget let us focus on how we can leverage information to support our businesses and communities,” she said.

Giving a budget overview at the event, BDO Associate Director Kafumu Mbewe echoed that the budget is expected to increase compliance levels and essential stability in the tax sphere in the Country.

“From the income tax side the changes remain the same and continue up to next year, and there is a proposed change of advance income tax at a rate of 15 percent this is on remittances made outside Zambia and exports that are above USD2000, this is one of the major changes has been proposed, we have noted a proposed revision of the cooperate income tax rate on profits that are realized from exports of nontraditional and value addition to copper cathodes, the Company that comes in mind is ZAMEFA their cooperate income tax has been 15 percent up to this year and by next year it will be 20 percent,” he said.

Mbewe also noted the proposed 20 percent presumptive tax increase on operators of public service vehicles, stating that the rate has been constant but the change is meant to equalize the tax with the conditions of the market “Another positive change is the provision for the ZRA Commissioner General to waive penalties that are charged on underestimation, under VAT the major change speaks to smart invoicing, in which the Government is looking at compliance, making it more transparent, and the changes are that any claim that is not issued from the smart invoicing system will not be deductible, unless there is an exemption facilitated by ZRA, this is allowing for stability and predictability in the tax policy.”  

And offering an Economic overview at the event, Ceasor Cheelo Associate Executive Director for Southern African Institute for Policy and Research said the budget is giving optimism and confidence to businesses and households amidst the aftershock of the drought.

“The budget is focused on public debt management and fiscal prudence, the reopening of the mines is giving new hope to the Copperbelt, new discoveries are in the wings, and other mines are expected to be initiated, we have heard about cobalt, and in the budget, there is an allocation towards geo-mapping, so that the backbone of data is owned by the Government and can be used to negotiate licenses as well as mining licenses, social support elements such as the increase in  CDF allocation, give us a birds-eye view of what the Government is thinking,” he said. During the panel discussion, ZRA Director for domestic Tax Shadreck Kachusa highlighted that the Authority had organized several engagements over the smart invoice initiative, and several stakeholders such as the financial sector called on ZRA to allow them more time to get into the system.

“There are sectors that will take a bit of time for them to integrate into the smart invoice system, and one vital thing about taxation is that it should not be a cost to the business, or take a burden that will affect the businesses drastically, so we did put in exemptions to allow everyone to come on board, and as we know we always have to expect bottlenecks, and if we make it mandatory we are allowing it to be punitive regime focused on penalties,” he said.

In his closing remarks, BDO Zambia Managing Partner Douglas Ironside observed that the budget is missing the major aspect of foreign direct investment, which is crucial to amassing substantial growth in the economy “On the smart invoicing initiative, hope ZRA does not focus on a small number of compliant clients, but there is a much larger non-compliant entity, and it is good that the smart invoicing will make it difficult for the noncompliant to operate.”

In its quest to continue providing a

IDC challenged to invest in revamp of Indeni & ZESCO

Public Sector Development Association (PSDA) President Yusuf Dodia has challenged the Industrial Development Cooperation (IDC) to invest in Indeni Petroleum Refinery Company Limited to reclaim the company’s viability to the energy sector in refining fuel products locally.

Speaking in an exclusive interview with the Zambian Business Times (ZBT) Dodia emphasized that the importation of fuel into the Country is an expensive venture but the reviving of Indeni will enable the Country to create the necessary value addition which is essential to the economy.

“Value is what IDC must promote, right now we are importing finished fuel from abroad which is the most expensive fuel we can buy, and yet if we brought in the feedstock as Indeni was designed, push it through Tazama to Ndola, and begin to go back to refining our fuel that is the most sensible value addition investment for IDC to be doing and to expand it by opening Indeni Phase two or phase three,” he said.

Dodia stated that IDC must also consider investing in ZESCO to sanitize the Country’s electricity shortfall which is almost crippling the economy.

He questioned some of the investments that IDC has made in the past stating, “IDC is the biggest state-owned enterprise so when they make a contract that is worth $500 million the people of Zambia suffer the consequences,  as things stand IDC is not been seen as a partner for investment but a dumping ground where when your business is not doing well or where you want to make a big profit, 10 years ago IDC bought two milling companies, and there was no explanation, and now they are considering to buy a farm and they are using public money, we have an argument that Government should not be in the business of running business” he said.

However, adding to the call made by the World Bank to Zambia to the removal of the Republic President from the IDC Board, Dodia remarked “With some of these investments if one wanted to challenge IDC where do you go when the Chairman is the head of state, in a normal good cooperate setting, the Head of State or the chairman should not seat on any of the lower units for which he may ask to arbitrate, by the President not being associated with IDC it allows for transparency,” he said.

Public Sector Development Association (PSDA) President Yusuf

6.6% Growth rate for 2025 budget unrealistic

Economist Notulu Salwindi has expressed skepticism about achieving the 6.6 percent Gross Domestic Product – GDP growth rate for the 2025 budget citing the severe impact of drought on the economy.

The Minister of Finance and National Planning, Dr. Situmbeko Musokotwane, announced a 6.6% GDP growth rate projection in the 2025 National budget.

Speaking in an exclusive interview with the Zambian Business Times (ZBT) Economist Notulu Salwindi said the damage caused by drought and the extended loadshedding requires significant recovery efforts, which will likely spill over into 2025.

“The economy is currently in recession, and next year should focus on recovery, not assuming a boom,” emphasized Salwindi.

Salwindi however predicted a minimal level of growth, contingent upon adequate rainfall.

To achieve this, he recommends measures to support recovery, rather than assuming a boom.

“The damage that has been done requires a lot of recovery, whether you are looking at household level or Company level everyone now is incurring costs if we are being honest, meaning there will be some borrowing that will be done, if you are not borrowing it means you are depleting on your savings, meaning next year either you replenish your savings or paying back debt that you acquired this year because you are trying to survive,” he observed.

However, Salwindi projected that the GDP is likely to attain a minimal level of growth but within the conditions of adequate rainfall.

“In other words, right now, we are under a recession, so next year we are trying to recover we don’t want to go into depression, everything in 2025 should be a recovery process and not where we are assuming. we are coming from a boom where all things where rosy, if people are recovering from a shock now what measures are you putting in place to ensure that they are being assisted in their recovery?” he questioned.

Economist Notulu Salwindi has expressed skepticism about