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ZRA pledges to dismantle VAT refund arrears

THE Zambia Revenue Authority says it is devising a plan to dismantle what it owes in Value Added Tax (VAT) refunds.

ZRA Commissioner General Kingsley Chanda also announced that the authority is targeting to collect not less than K59 billion this year as directed by the government.

Addressing the press in Lusaka yesterday, Chanda said going forward, the government through ZRA would allocate more resources to dismantle outstanding VAT refunds and minimise accumulation of refunds. 

“ZRA will ensure that current refunds in 2020 are honoured while a plan will be agreed with the Ministry of Finance on dealing with refunds arrears without distorting the input/output performance of VAT in 2020,” he said.

“Paying refund arrears using current collections distorts the actual performance of the TAX. For example, of the K10.5 billion refunded in 2019 only K2.8 billion related to transactions in 2019. The balance were 2013 to 2018 refund claims…For the year 2020, the government has set the target for ZRA at K59 billion. We are hopeful that with the support of our taxpayers and other stakeholders, we will meet this target.”
Chanda said ZRA had beaten last year’s revenue collection target by over K1 billion.

“It is very gratifying for me to announce that the ZRA surpassed its revenue target of K51.8 billion for the fiscal year 1st January 2019 to 31st December 2019 by K1.1 billion. During the year, we collected K63.8 billion in gross revenue while the refunds stood at K10.9 billion resulting in a net collection of K52.9 billion,” Chanda said. “The net collection of K52.9 translates to 17.6 per cent of the projected GDP estimate for 2019 compared to the targeted 17.3 per cent. This outstanding performance is despite the unfavourable economic environment especially during the second quarter of the year.”

And responding to Zambia Chamber of Mines chief executive officer Sokwani Chilembo on the need for stable policies in the industry, Chanda said they were contemplating putting up long-term policies.

“When we visited the Kansanshi Mine with the minister two weeks ago, he did promise that he was going to constitute a committee involving the Chamber of Mines and the ministry officials accompanied by ZRA to look at all the issues that the mining sector have relating to the 2020 tax regime and then decide the way forward,” he said.

“There have also been suggestions from Parliament, when I appeared before the budget committee there was a suggestion, that probably it’s time to consider a mining indaba in Zambia where we just comprehensively look at the long term taxation policy in this sector. As ZRA, we are open to such an initiative.

“We understand mining requires tax stability or indeed policy stability because it is an investment whose retains take a long time to realise and people want to know, when they put in their money what the environment will be in the next 10 years and government is very cognizant of that fact.”

Last year, at the eleventh hour, the government withdrew its intention to replace VAT with the widely opposed Sales Tax.

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