Zambia’s Finance Minister Margaret Mwanakatwe on 03 April at a joint consultative meeting with the tax authorities held to address concerns the private sector has with the sales tax regime the copper producer intends to implement on 01 July.
Mwanakatwe told the forum that sales tax is necessary to stop the refund debt escalation create fiscal space, to pay the outstanding VAT refunds, and more importantly increase revenue collection to support government’s social development programs.
The MinFin Minister is convinced that given the structure of the economy, the tax administration will enable government to collect sales tax with better efficiency.
As a business community, you may be wondering what will happen to your legitimate outstanding VAT claims after the implementation of sales tax. I want to assure you that will government pay off all outstanding legitimate VAT refunds. Reconciliations will be undertaken to close off vat and a plan will be put in place of how to liquidate the legitimate refunds.
Minister of Finance Hon. Margaret Mwanakatwe
She also said that in order to support local industry, a differentiated sales tax rate has been adopted at 16% on imported finished products and 9% on locally manufactured products. Furthermore, exports will be exempt from the sales tax in order to make them competitive and earn the country foreign exchange.
The government, has since October been engaged in internal consultations between different ministries and agencies in order to fully appreciate the impact of this change on the economy while on the external front, it has been in consultation with various players in the economy across the sectors ranging from agriculture to mining.