ZICA proposes deferment of GST implementation
By Staff Reporter
Zambia Institute of Chartered Accountants (ZICA) has proposed further deferment of the General Sales Tax (GST) implementation.
ZICA president Jason Kazilimani said that the scheduled effective implementation date on 1st July 2019 or any other within 2019 did not appear feasible.
Kazilimani said that the roll out of a new tax regime required enough time as there was much interdependence to consider.
He pointed out the issue of re-configuring firms and institutional system for them to be Sales Tax compliant.
“ZICA has proposed 1st January 2020 as the roll out date which would coincide and align the effective date to that of the new budgeting year making it easier for budgeting and forecasting with known Sales Tax rates,” he said.
He said timely implementation another key issue that would impact the success of the new tax measures.
“The success of the soon to be implemented General Sales Tax (GST) is largely dependent on implementing agencies ensuring that they minimize the cascading effects that could result along the value chains of goods and services as well as ensuring the sufficient time is allotted to the implementation process,” he said.
Kazilimani said ZICA acknowledged the efforts made thus far in terms of stakeholder engagement and applauded Finance Minister Margaret Mwanakatwe’s combined efforts the tax authority on the sensitization of the general public on the new tax bill that would see the epilogue of VAT in Zambia and the introduction of Sales Tax as the new tax regime.
“The Institute is cognisant of the fact that a well-designed Sales Tax could potentially spur local production and also lead to higher revenue for the fiscus”, he said.
Meanwhile, ZICA has hoped for a minimal effect as the current form of the 2019 Sales Tax Amendment Bill could result in the escalation of the price of goods and services through the cascading effect of sales tax along the value chains of goods and services.
Kazilimani said the motivation for the GST was due to the lack of refunds on tax credit mechanisms imbedded in the Sales Tax mechanism.
“ZICA Would therefore have the unwanted effect of increasing the prices of goods and services by whatever rate that is finally legislated,” he said.
Kazilimani said that one remedy will be the effective collection of data on sales tax exemption schedules which requires rigorous engagement of key stakeholders.
He said that ZICA further proposes that in the event that a single rate is hard to come by, a minimal impact rate not exceeding 5% should be set for locally sourced goods and service to reign in the ripple effect that may ensue.
And ZICA has commended the Financial Intelligence Centre -FIC- for exposing illicit financial activities in it Financial Trends Report.
Kaziliman said that contrary to attacks on FIC by some stakeholders, focus should be on arresting the reported illegal financial transactions saying the institution’s is following its basic practice.
Kaziliman has wondered how the publication of the trends report can jeopardize the operations of other investigative wings when no names have been mentioned in the report.
The 2018 Financial Intelligence Center report has revealed an increase in organized corruption and money laundering.