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ZRA keen to collect taxes reported in the FIC report

ZAMBIA Revenue Authority says it is keen to collect taxes from monies reported in the Financial Intelligence Centre report upon receiving details. ZRA corporate communications manager Topsy Sikalinda stated that the revenue authority had not yet received fine detail of the FIC report and once it received it, it shall ensure it collects the necessary taxes. He noted that the FIC report revealed that an estimated loss of revenue amounting to K1 billion was lost through tax evasion and possible violations under the Income Tax Act.

“The mandate of the Zambia Revenue Authority is to collect taxes on behalf of the Zambian government. We have received a number of press queries related to the FIC report, which is in public domain, hence our decision to update the nation on this important subject matter. ZRA is keen to collect taxes reported in the FIC report upon receiving details from the Centre,” Sikalinda said.

“The recent revelations by the Financial Intelligence Centre (FIC) in the 5th Money Laundering and Terrorist financing Trends report, 2018 are interesting.  The report reveals that there is an estimated loss of revenue amounting to K1 billion, [which] was lost through tax evasion and possible violations under the Income Tax Act chapter 323 and Customs and Excise Act chapter 322.”

Sikalinda further noted that most entities named in in tax evasion schemes were either not registered for tax purposes or were not tax compliant.

“The report highlights that “tax evasion schemes involved individuals or corporations misrepresenting their income to the Zambia Revenue Authority (ZRA). Many of the cases analysed on suspected tax evasion involved small and medium enterprises (SMEs). Most of these entities were either not registered for tax purposes or were not tax compliant,” Sikalinda stated.

“The report further states that some cases analysed were based on the following: Group company loans: some companies externalised funds to their parent companies. The same companies would then receive the funds in form of loans. This reduced their tax liability as interest on the loans received tax relief. As an authority mandated to collect these taxes, we await the fine details of this report to ensure we collect the required taxes if they are collectable. We have not yet received the fine detail of this report and if we receive it, we shall ensure we collect the necessary taxes,” said Sikalinda

The 2018 Trends report stated that small and medium scale enterprises were cited as the main culprits.

It also noted that individuals were using personal accounts for business purposes, which affected the completeness and accuracy of business records hence compromising their tax compliance and recommended that presumptive tax be extended to other sectors, especially small enterprises such as barbershops, salons and micro retail stores.

The report further revealed that some private companies that were awarded public contracts were funding named political parties in the country.

“The funds would move from these private companies to prominent individuals linked to the political parties. The cases analysed amounted to ZMW10 million. It is recommended that the Registrar of Societies makes it a requirement for all political parties to disclose their sources of funding and submit audited annual financial statements which should also be available for public scrutiny through the appropriate Parliamentary Committee,” states FIC report.

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