 |
|
The introduction of sales tax in Zambia is being
perceived with various concerns by the business community. The Ministry of
Finance has been embarking on sensitization visits with different stakeholders to
ensure that the sales tax and its implications are correctly understood.
Last week, the sensitization visit was with agricultural
stakeholders predominantly agro dealers and commercial farmer associations.
In her opening remarks, Minister of Finance, Margaret Mwanakatwe, said that the introduction of sales tax was one effective way to create fiscal space for economic growth. The Minister explained that the kind of sales tax that the government was trying to introduce was one that they refer to as a ‘hybrid sales tax’ in which they have combined the best of value-added tax (VAT) and the best of sales tax.
"As we go through the stages of finalizing and fashioning the sales tax bill, it is important to engage with you and to ensure that your concerns, submissions and recommendations - if they are going to make this Bill more robust - we take those into consideration," Mrs Mwanakatwe said.
In her opening remarks, Minister of Finance, Margaret Mwanakatwe, said that the introduction of sales tax was one effective way to create fiscal space for economic growth. The Minister explained that the kind of sales tax that the government was trying to introduce was one that they refer to as a ‘hybrid sales tax’ in which they have combined the best of value-added tax (VAT) and the best of sales tax.
"As we go through the stages of finalizing and fashioning the sales tax bill, it is important to engage with you and to ensure that your concerns, submissions and recommendations - if they are going to make this Bill more robust - we take those into consideration," Mrs Mwanakatwe said.
Speaking through their Executive Director, Mrs. Ella
Chembe, the Zambia National Farmers’ Union began by highlighting that their main concern was that
no new costs would be imposed on the agricultural sector; and that the list of
all items that were VAT exempt and zero-rated under VAT would also be on the sales tax
exempt list.ZNFU appealed for a guarantee that the sale tax, when
introduced, would not impact the agricultural sector negatively given the
challenges that the sector was already facing as a result of climate change.
“A change in tax regime …can have and will have
undesired and unintended consequences – the question is - what mechanism is in
place to make corrections against those negative impacts should they arise,” Luke
Mbewe, Chief Executive Officer of the Zambia Export Growers Association, said.
Arie De Kwaasteniet, Managing Director of Kachema Meat
Supplies, expressed concern at the possibility of cascading ie. a rise in the
cost of production as result of taxes which would compel an increase in the cost of
commodities.
“From what I understand there is a risk - if they are
not well organized - that we have to increase [our] price quite a bit through
cascading – it’s not clear which items will be exempted. We use imported
packaging materials - they cannot be made locally - we buy ingredients like spices,
and casing - again which are usually imported so it’s very important that for
us to add value to agricultural products that these items are going to be
exempted,” Mr. Kwaasteniet said.
 |
| Agricultural stakeholders listening to a presentation on sales tax (Picture by: Chileshe Kandeta - Ministry of Finance) |
The contention was that the sales tax would not only
raise the cost of doing business but would also be complicated to implement.
Zambia Revenue Authority (ZRA) Commissioner
for Domestic Taxes, Moses Shuko, disputed this assertion by saying that sales tax was actually easier and more cost-effective to administer than VAT. He added that it would also ensure that money for business
would not be locked up in VAT refunds and would be a cost-effective tax to administer.
“Why sales tax?It does not require complicated
techniques for record keeping and accounting - mere business knowledge of sales
is sufficient to administer the tax. Therefore the cost of administration of
the proposed sales tax is lower in the long run,” Mr. Shuko explained.
The sales tax which will be imposed at 9% on local sales and 16% on imports,will be effected on 1st July 2019 to replace the VAT system.
There were those stakeholders who felt that VAT refunds cushioned their business and acted like some form of an incentive. Johaan Jordan who was representing the Crocodile Farmers Association of Zambia (CFAZ) said the VAT refunds helped bring down the cost of production slightly for most crocodile farmers.Their main concern, however, bordered on the tax rate
The sales tax which will be imposed at 9% on local sales and 16% on imports,will be effected on 1st July 2019 to replace the VAT system.
There were those stakeholders who felt that VAT refunds cushioned their business and acted like some form of an incentive. Johaan Jordan who was representing the Crocodile Farmers Association of Zambia (CFAZ) said the VAT refunds helped bring down the cost of production slightly for most crocodile farmers.Their main concern, however, bordered on the tax rate
"With the sales tax the situation will now be different..,Whereas we might be allowed to export at zero rate, the big negative for the crocodile industry is the fact that the government has imposed a 10% export duty on the primary product - on the hide. With crocodile industry the primary product is the hide - huge expenses go into producing those hides..The crocodile industry is dead in the water unless that percentage can be reviewed," Mr. Jordan said.
In view of the concerns raised by various stakeholders, one can agree with ZNFU President, Jervis Zimba, who said that the growth
of the agricultural sector was now dependent on Zambia’s ability to reduce imports
of commodities that the country can grow and process locally.
No comments:
Post a Comment