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Public procurement remains major driver for corruption – ActionAid

WE cannot have gatekeepers such as lawyers and accountants facilitating corruption especially in public procurement, says ActionAid country director Nalucha Nganga Ziba.

And Ziba says financial intelligence units remain critical in the fight, prevention, detection, investigation and prosecution of corruption and other related financial crimes.

She said the 2019 FIC trends report indicates that public procurement activities have continued to be a major driver for corruption in Zambia.

“ActionAid observes that this is a worrying trend which must be addressed adequately as recommended by the report. We cannot have gate keepers such as lawyers and accountants facilitating corruption especially in public procurement,” Ziba said in a statement released Friday. “Government should also move quickly in amending the public procurement Act of 2008 to curb corruption as well as to promote transparency and accountability in public financial management.”

She called for the amendment of the public procurement Act of 2008.

Ziba said the provision should further be reviewed and amended to limit and clearly define the conditions for authorising direct, emergency and limited procurements.

On tax evasion, Ziba said though the 2019 report records a decline in such cases, K27 million remained a source of concern.

She said the Financial Intelligence Centre (FIC) report indicated that some of the methods employed to evade tax include among others false accounting techniques.

“This revelation confirms our concerns of the unbalanced Double Tax Agreements (DTAs) that facilitates loss of tax revenue, given that they provide very low tax provisions on interest payments, dividends, to mention but a few. In this case, given that companies pay taxes on profits, some companies reduce their tax liability by showing/inflating operation costs, thereby showing their loss-making situation and not making enough profits,” said Ziba. “This therefore leads to non-payment of profit taxes or paying less in profit taxes…. Though it can be argued that a company will pay Withholding Tax (WHT) on loan interest payments, however if the loan repayments are made to a foreign company domiciled in a country which has signed a DTA with Zambia, Withholding Taxes applicable will be based on that DTA. In many unbalanced DTA’s, WHT are low or exempted.”

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