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Replacement of VAT with GST still shrouded in uncertainty – ZICA

EY Zambia tax partner Patrick Mawire has observed that this is a difficult time for Zambia, especially for people who are running companies.

And Zambia Institute of Chartered Accountants (ZICA) secretary and acting chief executive officer Modest Hamalabi says the expected replacement of Value Added Tax with the Goods and Sales Tax is still shrouded in uncertainty.

In his case study on sales tax brief remarks at a ZICA-organised 2019 tax updates workshop at Hotel InterContinental in Lusaka yesterday, Mawire said: “This is a difficult time, to be honest.”

“I know, for example, our government representatives were at a mining tax indaba [in Cape Town] and two ministers gave conflicting statements. One said ‘we’ll re-examine the mining tax regime’ and the other one said ‘no, it’s here to stay,’” said Mawire.

“So if at that level of government there is such miscommunication or misunderstanding…. We know how difficult this time is, especially for people who are running companies and so on. The uncertainty, the fear – 1st April (when the tax regime will change from VAT to sales tax) is like tomorrow. We understand the fears.”

And Hamalabi regretted that there had not been much information on the sales tax framework.

In this year’s national budget, finance minister Margaret Mwanakatwe announced various major tax changes, key among them the abolishment of the VAT system effective April 1.

“This (transition from VAT to sales tax) has created a lot of anxiety in the market,” Hamalabi noted.

He added that ZICA had also noted the lack of sensitisation for taxpayers to help them prepare well in advance.

“We therefore wish to appeal to the Ministry of Finance and the Zambia Revenue Authority to ensure that there are adequate measures put in place to ensure smooth transition to the new tax. Further, the Ministry of Finance and ZRA must undertake massive post-sensitisation campaigns so that taxpayers understand the operations of the new tax without much difficult,” he appealed.

Hamalabi said with just over a month remaining before April 1, ZICA hoped that the legislation governing the new tax would be given priority in the upcoming session of Parliament.

“We further appeal to ZRA to ensure that the Goods and Sales Tax does not face the same challenges that the introduction of VAT withholding faced,” said Hamalabi.

Meanwhile, Ministry of Finance senior budget analyst Kalunga Mwape left hundreds of delegates in the packed auditorium either dissatisfied or laughing with his rather uncoordinated and uninformative presentation on the policy stance that informed the tax changes under this year’s national budget.

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