RENDER UNTO CAESAR
TBY talks to Kingsley Chanda, Commissioner General of Zambia Revenue Authority (ZRA), on the history of Zambian tax reform, how to implement a contractionary fiscal policy, and working to attract FDI.
BIOGRAPHY
Kingsley Chanda holds an MBA from Edith Cowan University of Australia and a bachelor’s in agricultural economics from the University of Zambia. Kingsley has chaired the Zambia Revenue Authority Commission of Inquiry and audited the compliance to SADC Trade Protocol of six SADC countries. He has further served as Trade Facilitation Advisor to COMESA, worked as an investment promotion advisor to the Director General of the Zambia Development Agency (ZDA) as part of an EU project, and as Commissioner of Customs, where he successfully managed the modernization process for Zambian Customs.What is the recent history of tax reform in Zambia?
Zambia undertook major tax reforms in the mid-1990s with the aim of addressing tax policy and administration. These reforms resulted in the establishment of the ZRA, through the 1993 Act of Parliament, as an autonomous body to collect direct taxes (income tax), indirect taxes (excise tax, VAT, property transfer tax), customs, and the mineral royalty tax for the Zambian government in 1994. The mid-1990s also saw major changes in the mining sector tax regime. As part of the privatization process, the government instituted a low tax regime for mining firms. In 2006, ZRA carried out a diagnostic review of tax policy and administration in collaboration with the International Monetary Fund (IMF) to merge the VAT and Direct Taxes Division to form the Domestic Taxes Division (DOMT). In 2013, TaxOnline was launched, in 2014 several taxes such as VAT and Turnover Tax for the informal sector were introduced, and in 2017 a 5% surtax on imports of all locally manufactured products was implemented.
How does ZRA work to bring Zambians into the taxed population?
There have also been moves to formalize the informal sector through the use of the Taxpayer Identification Numbers (TPIN); all traders are now required to use TPIN for all tax transactions. Taxpayers are also able to register for a TPIN that allows them to access information about their taxes, make queries, and track the status of those queries. Other initiatives that are in place include simplifying the tax system, organizing business functions with a focus on taxpayer type below an agreed income threshold, simplifying business registration procedures and the tax codes applicable, undertaking research aimed at understanding the business climate to inform administration and tax policy formulation to reduce the cost of compliance, increasing taxpayer education and outreach such as the introduction of a call center, and finally, establishing collaborative relationships with other government agencies for the purpose of data sharing to assist tax enforcement.
Fiscal tightening is a key part of governmental agenda and the economic recovery program. What will this mean for practice in the coming year?
The economic recovery program is a laudable program. It is anchored on the principle of not spending what we do not have and not borrowing beyond our ability to repay. The implication of the recovery plan is essentially an implementation of a contractionary fiscal policy, that is, reduced government expenditure coupled with an increased tax take from the economy. For ZRA, this means an increase in its revenue targets as the measure will require increased domestically generated funds to finance government operations.
How does ZRA work to tackle the issue of smuggling and tightening import and export duties on the border?
In a bid to curb smuggling and illegal imports and exports of goods, ZRA, through the investigation department, has scaled up anti-smuggling activities through its mobile compliance unit. The authority has also enhanced collaborations with neighboring countries in order to undertake joint efforts and sharing of strategic information.
What incentives is ZRA implementing to attract foreign business coming to the country?
Liaising with the Zambia Development Agency (ZDA), ZRA implements the statutory provisions that allow for tax rebates or exemptions for foreign investors. Beneficiaries of these incentives are required to register with ZRA so that they can start fulfilling tax obligations, among them filing returns and remitting PAYE. From the year 2013, the tax incentive regime has undergone changes with emphasis on rationalizing most of these incentives. Currently, under the Income Tax Act, several incentives accessed through the ZDA are available, most notably, 0% corporate tax on income and 0% withholding tax on the dividends declared by a business enterprise approved by the ZDA and carrying on electricity generation or manufacturing activities in a rural area, multi-facility economic zone, or industrial park for a period of five years starting from the commencement of operations.
RENDER UNTO CAESAR
TABLE OF CONTENTS
Year In Review
What A Year
Zambia has long been a bastion of stability in Southern Africa, and while its economy has been rocked in recent years by the falling value of copper prices, a devaluating kwacha, and high inflation, through the Economic Recovery Program the government has bold ambitions to right the ship.
read articleReview
Convoke, Confound & Collect
Squeezed between a rock and a rather hard place by the slowdown in Chinese demand for copper, by far Zambia's biggest export and government-revenue generator, President Lungu has been forced to get creative in his country's alliances to broaden revenue streams and lessen its dependence on the vagaries of one foreign market.
read articleGuest Speaker
Dr. Stergomena L. Tax, Executive Secretary, Southern African Development Community (SADC)
TBY talks to Dr. Stergomena L. Tax, Executive Secretary of the Southern African Development Community (SADC), on regional economic development, boosting pan-continental free trade agreements, and improving security through mutual development.
read articleInterview
Susan Sikaneta, Ambassador, Zambia to Ethiopia & Permanent Representative to the African Union and Economic Commission for Africa
TBY talks to Susan Sikaneta, Ambassador of Zambia to Ethiopia & Permanent Representative to the African Union and Economic Commission for Africa, on championing peace across the continent, advancing women's rights, and promoting Pan-Africanism.
read articleInterview
Sebastian C. Kopulande, CEO, Zambian International Trade & Investment Centre (ZITIC)
TBY talks to Sebastian C. Kopulande, CEO of Zambian International Trade & Investment Centre (ZITIC), on taming austerity, stimulating sustainable growth, and creating the framework to support entrepreneurship
read articleFocus: Zambia Plus
Adding it All Up
On October 20, 2016, at the 2017 Budget Address, Finance Minister Felix Mutati launched the government's economic recovery program, christened "Zambia Plus." The program is designed to spur domestic productivity, through strengthening ties and collaborating with external donors and developers.
read articleReview: Banking
Macroeconomics Rule the Roost
In its ongoing efforts to diversify away from one principal commodity, copper, the government fosters the development, standardization, and efficacy of the private sector. In doing so the systematic support of the financial universe, especially banks, is vital, as is the goal of financial inclusion.
read articleFocus: SME Growth
IMF support program
An IMF support program stands to provide Zambia with some much-needed discipline on its expenditure and operational efficiencies; however, many caution the need for Zambia to determine what it wants to achieve and how the program will benefit the country.
read articleInterview
Christabel M. Banda, Executive Director, Insurers Association of Zambia (IAZ)
TBY talks to Christabel M. Banda, Executive Director of Insurers Association of Zambia (IAZ), on the evolution of the local insurance landscape, raising awareness, and tackling challenges in the sector.
read articleFocus: Solar
Sunny Side Up
As power demand continues to rise and power production continues to fall behind, it's the same old story for Zambia, still wrestling with an ongoing energy crisis. Public- and private-sector drives are seeking to mitigate this deficit by activating the country's solar industry.
read articleInterview
Margaret K. Chalwe-Mudenda, Director General, Zambia Information and Communications Technology Authority (ZICTA)
TBY talks to Margaret K. Chalwe-Mudenda, Director General of Zambia Information and Communications Technology Authority (ZICTA), on new projects, the ZNDC, and expectations for the year ahead.
read articleInterview
Hon. Dora Siliya, Minister, Agriculture
TBY talks to Hon. Dora Siliya, Minister of Agriculture, on the investments being made in agriculture to enable agricultural households, diversifying Zambia's basket of produce, and making international markets more accessible for local producers.
read articleInterview
Hon. Charles R. Banda, Minister, Tourism and Arts
TBY talks to Hon. Charles R. Banda, Minister of Tourism and Arts, on the wealth of tourism destinations within Zambia, efforts to bring more visitors to the country, and what the Tourism Development Fund will contribute to developments.
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