VAT Rule 18 meant to stop fraud-Chikwanda

VALUE Added Tax (VAT) Rule 18 was introduced to deal with the fraud that was explicit in the old law, Finance Minister Alexander Chikwanda has revealed.

He said Government as a custodian of the interests of Zambians changed the system of mining taxation to curtail fraudulence, stating however that Government had remained open to dialogue on the new mining taxation law.

Mr Chikwanda said that it was regrettable that Government consultation mechanism over VAT Rule 18 did not lend expedition to the undertaking.

He said this when he commissioned a Zambia Revenue Authority (ZRA) housing project at Mokambo border in Mufulira yesterday.

Mr Chikwanda chastised some Non-Governmental Organisations for pandering to incorrect tax collection systems meant to please their foreign donors.

He said the misconceptions being created by some NGOs and other stakeholders that Government was not willing to pay VAT to mining companies were driven by malice which was malafide

“We will discuss policy issues with the mining companies but operational issues relating to taxation will remain an exclusive preserve of a specialized entity which is ZRA. This is inescapable imperative of good governance. Government is the host to all investors, local and external. We therefore have a duty, obligation and responsibility to ensure a conducive atmosphere for all players in the economy, whether large or small. Policy summersaults are at variance with the predictability and consistence which all players who take the plunge to invest in our economy need,” Mr Chikwanda said.

He said Government would soon streamline the controversial Value Added Tax (VAT) Rule 18 to offer the desired relief to all exporters in a bid to increase the flow of export revenue.

Mr Chikwanda said the new taxation model was a final tax which had intrinsic value of simplicity and that it was not the wish of Government to make the mining companies less viable.

He said Government wanted to maintain and protect jobs in the sector apart from ensuring that copper volumes did not decline to a point where the mines would be forced to close.

Mr Chikwanda said the statutes being administered by ZRA, including the Mines and Mineral Act had all the necessary elements for some reprieve when the authority was satisfied beyond doubt that there was cause for relief.

He said various mining companies had argued in good faith that the existing mining laws did not provide enough or adequate mechanisms and incentives for large outlays of capital investment but that Government was going to critically scrutinize the existing statutes with the view to reinforcing the incentives in order to enlist new investments.

The Finance minister said Zambia’s economy would be facing challenges in the next coming few years largely because of externally induced shocks.

He said the outlook of the global economy although not exceedingly bleak was not too bright, compelling the World Bank to downgrade global economic growth from 3.5 percent to 3 percent this year.

“There are obviously attendant downside risks in the deceleration in the world economic growth rates.

“Copper prices in the last few months have plummeted from US$6,500 to US$5,500 per tonne and could get lower as shocks keep on increasing. Lower volumes of copper exports and reduced foreign exchange inflow will depress Government revenue and constrain imports.

This will in turn lower tax revenues that have their origins in international trade. Reduced exports earnings could impact unfavourably on the Kwacha parity, a process that stokes inflationary spirals,” Mr Chikwanda said.

Mr Chikwanda said there was need to wipe out poverty and that this would only be possible if the country’s economy was growing in double digits of above 10 percent.

And ZRA commissioner general Berlin Msiska said the commission collected in excess of K27, 631 000 in the year ending 2014, exceeding the targetby more than K955 000.

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