Sales Tax has eliminated something good – Deloitte

Tax and Audit Advisory firm, Deloitte has likened the introduction of the Sales Tax by government to the idiomatic expression of throwing out the baby with the bathwater.

Deloitte Associate Director for Tax, Malcolm Jhala says the introduction of Sales Tax by government has eliminated something good while trying to get rid of something bad.

Mr. Jhala says even within the Value Added Tax (VAT) system which government has abolished in preference to the Sales Tax, there were mechanisms that could have been employed to restrict refunds.

Speaking during a Deloitte post budget breakfast in Lusaka, Mr. Jhala says for the Mining sector for instance, government could have used the first schedule and exempt the export of copper minerals.

Mr. Jhala says such a measure could have achieved the same effects government wants to accomplish with the Sales tax without necessarily affecting other players in the economy.

He says given how the Sales Tax works, the potential challenge that should be anticipated will be managing the buildup of tax on tax.

Mr. Jhala says the Zambia Revenue Authority (ZRA) will have to come up with an elaborate exemption mechanism for resellers.

And Finance Minister Margaret Mwanakatwe who was the chief guest at the breakfast has emphasized that measures announced in the 2019 national budget are meant to balance the books.

Mrs. Mwanakatwe says this is why the budget has been viewed to be tough.

She states that in balancing the books on the other hand, what government is seeking to safeguard is social protection owing to the many inequalities in the Country.