THE Zambia Revenue Authority (ZRA) has insisted that the Post Newspapers and its proprietor Fred M’membe must pay all statutory obligations they owe the institution in form of tax amounting to K22 million inclusive of interest and penalties accrued so far.
ZRA has argued that the Value Added Tax (VAT) and individual income tax collected by the Post Newspaper from clients and its employees respectively did not form part of the newspaper company’s coffers.
This is in a matter in which the Post and Fred M’membe have run to the Lusaka High Court to seek judicial review after ZRA demanded the payment of K22 million that was outstanding.
The Revenue House has said the Post was obliged to collect tax and remit it to ZRA without fail but did not remit despite collecting.
The Post had also neglected to remit to ZRA the Pay As You Earn (PAYE) and VAT deducted and collected from employees and clients respectively, including company tax hence the Post having admitted outstanding tax debt due to ZRA in the sum of K22, 517, 952, 04 inclusive of interest and penalties.
There was no justification, the Authority has argued, for Mr M’membe to claim for special treatment because ZRA was vested with authority to administer and manage the tax system in the country and it did so within the remit of the law.
When the matter came up for hearing yesterday before High Court Judge Mwiinde Siavwapa in chambers, both counsels for the Post and ZRA said they would rely on the documents submitted before the court.
Both parties will rely on the affidavits and evidence before the High Court before they could make their final written submissions.
Judge Siavwapa then set 30th October, 2015 as date for judgment and reminded both parties to make their written submission by 31th August, 2015.
In spite of the fact that in 2011 ZRA waived K16 million from the Post indebtedness in interest and penalties in the hope that the company would settle subsequate tax obligations, the company failed and accrued more debt in taxes.
Now ZRA wants the outstanding K22 million paid in one installment and feels the Post had the capacity to do so because they have invested over US$1 million in agricultural activities while neglecting or refusing to pay tax obligations.
According to submissions before the High Court by ZRA, the Post has not been remitting company tax for the period 2006-2007, 2008-2009 and 2011-2012 financial years and other outstanding tax debt due on its undertaking for Time to Pay Arrears of Tax, in the Time to Pay Agreement (TPA).
ZRA said the Post did not deserve leniency or judicial review because the institution could not be treated in an exceptional manner as it had even failed to honour previous settlement agreements.
In 2011, ZRA cancelled over K16million in favour of the Post in unpaid or unremitted taxes, but despite the action by ZRA to give the Post and M’membe the waiver, they continued to breach the law by failure to honour the terms of settlement including retaining payments that should have been forwarded to ZRA.
Commissioner General Berlin Msiska wrote to Mr. M’membe and the Post Newspapers in September, 2014 reminding them that they had neglected to fulfill their obligations by not paying taxes.
“As you are aware in October, 2011, we approved your appeal for a waiver of penalties and interest after you successfully paid the principal taxes in installments. Our expectations were that you would be a compliant taxpayer. However, it has come to our attention that you have accumulated another tax liability. You neglected to remain current with your tax obligations and accumulated yet another tax liability,” Mr. Msiska wrote.
He said the institution was constrained to accept the proposals made by the Post and Mr. M’membe on the mode of payment of tax because they had continued to breach the law on tax remittance.
“In the premises, we are constrained to accept your proposal to clear your tax liability in installments as there is no compelling reasons for us to once more exercise our discretion and allow you to settle your tax obligations by installments. We now demand the immediate payment of the total tax liability of K22,517,952: 05 without fail,” Mr. Msiska said.