ActionAid is appealing to Government to consider the consequences of retracting the previous agreement they made with the Zambia Revenue Authority (ZRA) regarding the conditions which should be met by exporters in order to qualify for VAT zero rating of exported goods, and set political and personal interests aside when considering the issue.
This follows a statement by the Chamber of Mines earlier this week in which it denied having reached an agreement with ZRA. In addition, it contested the enforcement of this regulation by ZRA from 2013 onwards, by arguing against the requirement for exporters of goods and services to share documents from the importing countries, with ZRA shipping inspection and subsequent documents qualifying as sufficient proof of export.
ZRA’s decision to withhold ZMW3.5 billion close to $600 million VAT refund on account of taxpayers who had declared zero rated exports but had not furnished all the required documents, is reported to have attracted the attention of Minister of Finance Hon. Chikwanda who proposed that ZRA should amend VAT rule no. 18.
Kryticous Patrick Nshindano, economic justice project officer at ActionAid said: “The call and subsequent decision to revoke the requirements to provide proof of transactions for our exports is not based on strong, substantive and convincing grounds. There has been no explanation as to why it is difficult for mining companies to disclose where they sell their products and at what price. We are of the view that the requirements and conditions put across by ZRA to affect refunds are realistic and made in good faith, bearing in mind that some companies take advantage of any gaps in our tax regimes to dodge paying fair share of their tax obligations.
We believe that the conditions instituted by ZRA aims at addressing information asymmetry and promote transparency with respect to the actual prices of the exports which may be useful in countering creative accounting and negative tax planning often used by some companies to evade paying fair share of their tax obligation. We believe the disclosure of information ZRA is asking for is useful in auditing and computation of corporate tax bearing in mind that many big companies have been year in and year out declaring losses.
“Yet again we have seen our leaders compromising and bowing to pressure from big companies to shy away from their responsibility to safeguard our national resources. We encourage and cherish investments in our country but it is responsibility of the companies to act in a transparent and accountable manner. It is unfortunate that whenever there is effort to bridge gaps and loopholes being exploited by big companies to avoid and evade taxes, our leaders quickly back track on their resolve to address these gaps. It is saddening to see the continued contradiction in trends where we have to borrow and yet not doing enough to raise revenue.”
“Multinational companies regularly deprive Zambia of vital money that could be used for much needed public services such as education and health. Measures must be taken to close the tax loopholes that facilitate this and not implementing VAT rule no. 18 deprives us of the revenue we need to provide basic services for majority of our citizens