ZRA exposes Post tax fraud

 

…Supreme Court throws out Post Newspaper tax appeal

By Nation Reporter

THE brazen tax delinquency and documented history of persistent tax default by the Post Newspaper has been exposed in the Supreme Court.

The Zambia Revenue Authority has revealed that inspite of a K16 billion write-off, the Post had continued to evade tax and default on agreements to settle its indebtedness in instalments.

The Supreme Court has subsequently thrown out an appeal by the Post which claimed, among other things, that the former Minister of Finance Alexander Chikwanda had promised to “fix” them, hence the decision by ZRA to reject payment of the tax arrears in instalments.

The court dismissed a transcript of a secretly recorded conversation between the minister and a third party intended to show that Government intended to “fix” the newspaper.

Justices R. Kaoma, M. Musonda and J. Chinyama  noted that courts of law could not be properly invited to make binding pronouncements on the basis of ‘‘mysterious or murky evidence’’ limited to affidavit depositions without any opportunity to test such evidence for its cogency.

The three judges further stated that they would not feel persuaded that the alleged or purported transcript of a recording of a conversation between former Finance Minister Chikwanda and a third party could be of such legitimate evidential value as to form a sound basis for a binding pronouncement by the court in a contested matter.

In a fairly detailed opposing Affidavit to the Post’s application, ZRA traced the genesis of the Post’s tax liabilities pointing out that the company’s tax woes had their roots in its failure to remit taxes which the company had either deducted from its employees salaries by way of PAYE (PAYE) or collected from its clients (Value Added Tax or VAT) on behalf of ZRA.  ZRA further argued that, quite apart from the Post having benefitted from tax respite to the tune of K16,411,679.00 in January 2012, the company had a documented history of persistent tax default and general tax delinquency.

The Post argued that ZRA’s demand to have the more than K26 million tax liability paid in a single instalment was tantamount to demanding to have the Post “square the circle’’.

But ZRA argued that the Post had a documented history of persistent tax default and general tax delinquency. The Court heard that on 19th September, 2014, the Commissioner-General of ZRA wrote to Fred M’membe, the Managing Director of the Post, by way of responding to the Post’s proposed tax settlement plan.  In this letter, the ZRA commissioner-General advised M’membe that, as of 19th September, 2014 the Post owed a total of K22,517,952.04 in unremitted PAY AS YOU EARN (PAYE), Value Added Tax (VAT) and the consequential interest and penalties.  The Commissioner-General’s letter then went on to state the following:

“ ….. As you are aware, in about October, 2011, we approved your appeal for a waiver of penalties and interest after you successfully paid the principal taxes in instalments.  Our expectation was that you would be a compliant tax payer.  However, you accumulated another tax liability of K4,013,205.06 which resulted in us entering into a Time to Pay Agreement (TPA).  Whilst the TPA is in place, you have neglected to remain current with your tax obligations and accumulated yet another liability …”

In its judgment dated September 28, 2016, the Supreme Court dismissed the appeal because the grounds upon which The Post had premised its application, namely procedural impropriety and irrationality, were untenable.

The Supreme Court agreed that there was no illegality, unreasonableness or procedural impropriety in the manner the Commissioner General of ZRA demanded immediate payment of tax arrears and refused payment in installments given the record of default.

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