Resolve Rule 18

The hiatus between Government and exporters over Rule 18 must be resolved urgently before any more damage is wrought to the economy.

Similarly the standoff between the mining industry and the Copperbelt Energy Corporation over spiraling energy costs must find resolution and closure.

The mining industry, the engine of the economy, should be allowed to operate without endless encumbrances, which are ultimately threatening our national classification as a favorite investment destination.

It seems counter intuitive that Government as a major player in both circumstances has allowed the situation to deteriorate to a point where operations have been jeopardized and in the process jobs are now threatened.

Recourse to arbitration or indeed some other forms of dialogue should have been invoked long before CEC cut off electricity from KCM, which resulted in flooding and subsequent threat to life.

An unfortunate impression has been created that the mining industry has been less than forthright and at worst is involved in underhand   activities. This impression has been fostered and promoted by media and civic organizations, sometimes in the absence of full information. We are aware that some of the contentious matters are in court, but these are matters that should have been resolved around a negotiating table considering that the issues are quite self evident.

 All the parties, the Government and business, must embrace a spirit of fairness, decency and collective commitment to the common good of the country to arrive at a solution that will best serve the interest of the country.

We have no doubt that we have men and women on both sides that have decent values to aspire for and attain a settlement that recognizes and appreciates the constraints within which both parties operate.

It is regrettable that a commercial matter has been politicized to a level where irrelevant exogenous interests have been introduced thereby obfuscating the underlying and real issues, which are not beyond resolution.

VAT general administrative Rule number 18 was introduced in 1997 with  the  very good intention of making Zambian exports competitive, by giving exporters a refund of their VAT. It was the intention that Government would refund the VAT components of exports.

Like all other bureaucracies the devil is in the detail. Quite rightly the Zambia Revenue Authority has demanded for appropriate documentation and authentication of transaction before refunds are made, but the exporters including the mines cite difficulties in securing third party documentation.

In the breech of the resulting standoff, accusations and counter accusation have been made which are now materializing in threats that Government has categorized as arm twisting.

What is not in question however is the fact that Government has collected the money. In the case of the mines this has ballooned to more than US$600million.

This problem has been simmering for the last three years to the extent that the mines, who are the biggest beneficiaries, are threatening to downscale operations and in some cases freeze development programmes that would have created more jobs.

Clearly this situation is untenable.

Any deferment of capital projects will have the negative effect of stunting our economy further.

The insistence by ZRA that  refunds withheld on account of non-compliance with the existing Rule 18 could  only be made when the legal documentation had been provided, must be revisited as a matter of urgency considering the difficulty that the mines and indeed other exporters are facing  with the procurement of such documents.

Categorized | Editorial

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