Mwanakatwe optimistic about sales tax regime

By Staff Reporter

FINANCE Minister Margaret Mwanakatwe says the new Sales Tax will enable government collect enough resources to improve its provision of public services.

Mwanakatwe also observed that the new tax regime would promote local revenue collection to support sustainable economic development.

Speaking during the Sales Tax sensitisation and consultation workshop at Royal Solwezi Hotel last Friday, Mwanakatwe said the decision by government to abolish VAT and replace it with Sales Tax would increase revenue collection for government’s social developmental programmes and further reduce poverty levels.

In a speech read by the Director of Budget Office Joseph Nonde, the minister said the new tax regime would enable government pay off outstanding VAT refunds and create fiscal space for the nation.

“As you may be aware, our country’s ascendance to a middle-income country status has caused the fiscal support we received from our cooperating partners to reduce. There is need therefore, to review our domestic revenue mobilisation strategies to sustain our development agenda and reduce poverty,” she said.

Mwanakatwe said the new system would address the effects of tax cascading associated with Sales Tax and support exemptions on capital goods, basic food items, essential goods and services in the health, education and water sectors.

“Exemptions on selected inputs into production in priority sectors identified in the revised 7th National Development Plan, namely agriculture, mining and tourism have also been provided to ensure that the cost of production is contained. Given the exemptions provided under the Sales Tax, it is expected that production costs will remain relatively unchanged”, she said.

Mwanakatwe assured that government would pay off all the outstanding legitimate VAT refunds and thanked the business community for its cooperation and patience during the policy development process.

And speaking during the same workshop, Zambia Revenue Authority (ZRA) Domestic Taxes Commissioner, Moses Shuko explained that Sales Tax would be charged on all taxable goods and services supplied at every stage in the supply chain.

“Sales Tax is a consumption tax on goods and services which will be charged on taxable goods and services from manufacturing, production, distribution, wholesale and retail. Provisions for exemptions from tax are on capital goods, inputs as prescribed in the exemption schedule, designed basic and essential goods and services, designed supplies to privileged persons and exports,” he said.

North-Western Chamber of Commerce and Industry (ZACCI) president, Mukumbi Kafuta, said the business environment would benefit from the replacement of VAT with Sales Tax.

He commended ZRA for providing detailed information on the new tax regime.

He implored the Authority to ensure that all the queries and concerns raised by the business community on the new tax regime be addressed.