Exemptions reducing tax base – IMF

Sat, 10 Feb 2018 09:42:25 +0000

By BUUMBA CHIMBULU

THE International Monetary Fund (IMF) has observed that certain tax exemptions are narrowing Zambia’s tax base which urgently needs to be broadened to allow Government collect more revenue for development.

IMF Zambia country representative, Alfredo Baldini, observed that tax exemptions on certain areas which had special treatment were narrowing the tax base.

Dr. Baldini emphasised that Zambia needed to improve on its tax administration to capture more revenue from all areas of the economy.

“The overall collection which is a problem in the region and it is also in Zambia is that taxes need to be extended and broadened and the fact that the main tax exemption including Value Added Tax and certain sectors have special treatment, creates a narrow tax base,” he said.

He was speaking in Lusaka yesterday at a media briefing where Government, IMF and the European Union gave an update on the just ended 2019 Africa Fiscal Forum.

And when asked for a comment on the assumptions that Zambia had one of the highest taxes in the Sub-Saharan region, Dr. Baldini said “the Zambian system is on 35 percent progressive threshold and that is not in line with international compliance, it is not very high. The problem in the region is improving compliance.”

Dr. Baldini also said the requirement for all bank account holders to have Tax Payers Identification Numbers would improve tax avoidance.

And IMF African Department deputy director, Roger Nord, explained that the forum focused on international and cross border taxation, inequality and fiscal policy and digital revolution.

Mr. Nord explained that the forum discussed how African governments could put in place taxes which would ensure multinational companies did not avoid tax, thereby lowering the tax base.

Meanwhile, acting Secretary to the Treasury, Mukuli Chikuba, said the forum provided an opportunity for Government to reposition itself on how to have a better tax administration.

“We have learnt a lot on how Zambia can reposition itself to move away from the usual targets that we have in tax policy pronouncements in the medium term and this is the review that we want to take in the 2019 national budget,” Mr. Chikuba said.