Business

SEVERAL TAX REFORMS COMING

….the current tax system has too many VAT exemptions which are likely to be removed

By BUUMBA CHIMBULU

SEVERAL tax reforms that will focus on efficiency on revenue collection and widening the tax base are expected to be announced by Government in the next few years.

This is according to Daniel Kavishe, Africa Economist at First National Bank (FNB) who has indicated that the institution expected the announcement of revenue reforms that would focus on efficiency on tax collection and widening the tax base.

“Over the next few years, we expect the announcement of tax reforms that will focus on efficiency on tax collection and widening the tax base.

“There are several Value Added Tax (VAT) exemptions and zero rated VAT orders under the current system that are likely to be removed given the broader strategy of improving the tax base revenue,” Mr Kavishe said in his analysis on Zambia’s economic performance.

Meanwhile, the institution stated that it was expecting Zambia’s economic conditions to improve over the next few years.

After having contracted by -3.0 percent in 2020, the economy saw a significant rebound in 2021 and is now expected to grow to 3.8 percent in 2022 before stabilising at 4.0 percent in 2023.

According to Mr Kavishe, Zambia’s economy remained on a path of recovery.

“Structurally, Zambia is reliant on the primary industry’s performance, as is seen with most economies across the region. Reforms in the mining sector should help boost production and drive government tax revenue,” he said.

Mr Kavishe also banked the institution’s optimism on agricultural, saying while a small part of the economy, would help further keep inflation at bay and drive-up employment and consumer spending.

FNB also expects manufacturing and the broader retail sector to see some improvement in 2022.

The former will further be boosted by domestic tax regime changes that favour local production of various key goods in the country.

“Another key sector that will drive economic performance over the next few years is construction, supported by government’s broader attempt to deal with infrastructure gaps across the economy.  “Vital to the government’s plans are sizeable gains in the energy sector that can enable increased domestic production of electricity,” Mr Kavishe said.

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