Cabinet yesterday approved the publication and introduction of the Sales Tax Bill and the Income Tax Amendment Bill of 2019, to parliament.
Chief Government Spokesperson Dora Siliya announced that the bills were approved during a Special Cabinet Meeting held at State House yesterday.
In a statement issued to ZANIS in Lusaka today, Ms. Siliya said the Sales Tax Bill of 2019 has a number of objectives, which include the introduction of a sales tax on the supply of goods by manufacturers, producers, distributors, wholesalers and retailers and the importers of goods into the country.
She explained that the bill also aims at imposing sales tax on the supply of services in the country, by service providers and importers of services, with an exemption of certain supplies, imports and exports of goods and services from tax.
“This bill has a number of objectives such as providing for the registration and de-registration of taxable suppliers; provide for the use of electronic devices, equipment or any other devices; provide for the collection of sales tax; repeal and replace the Value Added Tax Act, 1995; and provide for matters connected with, or incidental to, the foregoing,” she stressed.
Ms. Siliya who is also Minister of Information and Broadcasting Services pointed out that Cabinet is of the view that the proposed Sales Tax will put a stop to the escalation of VAT refunds, dating back to 2009, and estimated at a cost K17.9 billion as at January 9th, 2019.
She underscored that the VAT refunds have negatively affected the economy of the nation, adding that the Sales Tax is the best way forward for the country.
On the Income Tax Amendment Bill of 2019, Ms. Siliya said the object of the Bill is to revise the turnover tax threshold from eight hundred thousand Kwacha (K800, 000) per annum to five hundred thousand Kwacha (K500, 000) in order to harmonise it with the Sales Tax threshold.
She further emphasized that the enactment of the Sales Tax will have an effect on the Income Tax Act, Cap. 323 as the turnover tax threshold of the Income Tax Amendment Bill will be five hundred thousand kwacha or below, per annum.
Below is the full statement
(SPECIAL) CABINET MEETING HELD AT STATE HOUSE ON MONDAY, 1ST APRIL, 2019
His Excellency the President Mr. Edgar Chagwa Lungu called for the 8th (Special) Cabinet Meeting at State House held today, Monday 1st April, 2019, at which two (2) substantive legislative matters were discussed as follows:
1.?Sales Tax Bill, 2019
Cabinet approved for publication and introduction in Parliament, of “The Sales Tax Bill, 2019”, whose objectives are to:
(a) introduce a sales tax on the supply of goods in the Republic on manufacturers, producers, distributors, wholesalers and retailers and the importers of goods into the Republic;
(b) impose sales tax on the supply of services in the Republic by service providers and importers of services into the Republic;
(c) exempt certain supplies, imports and exports of goods and services from tax;
(d) provide for the registration and de-registration of taxable suppliers;
(e) provide for the use of electronic devices, equipment or any other devices;
(f) provide for the collection of sales tax;
(g) repeal and replace the Value Added Tax Act, 1995; and
(h) provide for matters connected with, or incidental to, the foregoing.
Cabinet is of the view that the proposed Sales Tax is also aimed at stopping the escalation of VAT refunds, dating back 2009, estimated at K17.9 billion as at 9th January, 2019.
The VAT refunds have greatly negatively affected the economy and, therefore, the Sales Tax is the best way forward for the country.
Further, the introduction of the Sales Tax will enhance domestic revenue mobilisation by broadening the tax base and simplifying administration as well as compliance processes.
The Bill shall be introduced in Parliament tomorrow, Friday 2nd April, 2019 and after final approval by Parliament during the June sitting, the effective date as announced by the Minister of Finance is 1st July, 2019.
2.?The Income Tax (Amendment) Bill, 2019
Cabinet in line with the approval of the Sales Tax, also approved a consequential Bill, The Income Tax (Amendment) Bill, 2019. The object of the Bill is to revise the turnover tax threshold from eight hundred thousand Kwacha (K800,000) per annum to five hundred thousand Kwacha (K500,000) in order to harmonise it with the Sales Tax threshold.
The enactment of the Sales Tax will have an effect onthe Income Tax Act, Cap. 323 as the turnover tax threshold of the Income Tax (Amendment) Bill will be five hundred thousand kwacha or below, per annum. Once a tax payer exceeds this threshold, they will become liable to pay Sales Tax in respect of taxable supplies.
Can someone explain in simple terms and layman language?
Let’s roll … each jurisdiction also needs to have its own sales tax point. When you decentralize the process you enlarge your catchment capacity.
Let’s roll …
Ine Dizzy….
I know friends who work for ZRA, there are 2 floors on that brown building just for VAT. What will happen to their jobs?
Did Cabinet think about that or ZRA will ignore Cabinet decisions as usual?
@Nostra … we will get them reassigned to something more interesting.
They will be just fine … that’s how we run this country
How do you say “sales tax” in layman’s language? Can someone explain this? Hahahaha……yaba!
@ Nostradumas In life you should always be prepared for a rainy day. Dont wait until you retire before you start back up plans. And here we are talking of ZRA, very well paid. So the issue of saving is very possible with ZRA employees and if they just go merry making when they get paid, then those who will be living in poverty after retirement will be considered dunderheads.
a complete waste of time. VAT refund to mining or for that matter any other net outgo situation company could have been solved by making them VAT exempt.
Margaret is waste of time and so are ZRA kaponyas looking for milking the system through their useless actions and travelling the globe disguised as doing something for the country.
B. R Mumba Jr-sr.-below par. You are a bootlicker of inefficient clueless politicians in power. Nothing more than a chola boy
Precisely, one would have thought that the information will not be in jargon form but that it will be relayed in a layman’s language. Our main concern is the rate of this sales tax, that is our main interest. Trying to hide behind the vail of jargon will not help matters at all. Come out clean and say it as it is. What is the time frame for all interested parties to put things in place? What are the implications to the VAT refunds owed to the mines? Is the government going to pay or they will simply make a trade off with what the mines will accumulate in sales tax? What we need is a serious engagement with technocrats to dissect and elucidate this whole saga. Leaving it to guesswork is what creates problems and gives birth to speculations.
When you see PF ministers waffelling about revised taxes or re-registration of any thing or renewal of anything , just know they are increasing amounts payable and are seeking new ways of taxing rasing money ……
grz under lungu is broke and any from of tax increase is an option.
Soon expect national registration card renewal, passport renewal , t-pin renewal , bank account renewal , SIM card renewal …..you pay.
the only thing they will not renew is title deeds to properties as most of PF have unexplained properties through stolen money.
There is no layman’s language for this article
Tells you its not meant for you to understand thus government will implement something that will add to more subtraction on the already overloaded subtractions being experienced! Less money in your pocket as government is desperate to raise money for its coffers.
When you do not want anyone to understand what you’re saying say it in the language that they don’t understand and get away with it! Here government wants to sc#%w its citizens.
A clear case of mismanagement of the tax system and absolute failure. The VAT system is the simplest and most effective tax system. You simply collect tax at each point value is added to a product or service.
Instead of retaining the input VAT paid by the tax payer,the PF government would immediately spend all of the sales VAT collected .End result was a huge debt in unpaid VAT returns to many mining companies.
DO NOT SPEND MONEY YOU DON’T HAVE.
Awe me confused….. What’s the implication on the external trade and internal trade…. For example I buy something from a shop…it has a VAT component, and gives me total to pay inclusive of that VAT….now how will it be with the Sales Tax….please someone help me understand from this simple perspective….
American cabinet has a fraction of this number but look at the size of their economy. Africans.
30% of national budget is eaten by MPs and top civil servants.
They are complicating the whole issue so that they can steal properly
You can not combine bear and work
This should have been done last year
Not bad but just monitor the process.when are you passing 25% gratuity as law.Please we need that as soon as possible.Maybe we can vote for you if you pass 25% gratuity bill.
25% gratuity is fine but then NAPSA shall be scrapped. It is an institution to steal workers money by parasitic directors and senior officials at NAPSA whose only job is to attend long meetings, eat biscuits, drink and fart.
Same goes for Members of parliament, opposition included, PSs, statehouse politicians and employees posted in foreign mission.
Well done …many business entities were cheating on VAT refunds. They made it a way of getting free cash from GRZ. Mwanya now you will not have that free money.
VAT is more modern and progressive so Zambia has now opted for a more backward tax system.
More pain for Suppliers and Industries! Sales Tax will increase the cost of doing business further by between 30 and 40%!
A supplier pays Sales tax on their order from wholesalers. The Supplier in turn charges sales sales tax on top of their quotation to the Industries. The industries have to absorb the compounded Sales tax on their supplies or come up with a different sourcing strategy that eliminates the Suppliers! In the worst case scenario, if the anticipated additional cost makes the business unsustainable, you close shop!
The question one may ask is why do we even need the sales tax if it is only going to kill businesses? The only reason VAT is removed is because of Refund issues! Why collect something that will need to be refunded? Why not come up with an alternative to both VAT…
The business environment in Zambia is very competitive now. Passing on costs to consumers is suicidal. Take a look at the transport business. Even when they cry to increase they still have to allow passengers and cargo owners to pay what they can afford. So it’s a lie that abolishing VAT will lead to price increases.
VAT was the biggest fraud in this country since mealie-meal coupons which made Ward Chairmen and Apparachiks rich. This time, investors got their operational costs paid by GRZ instead of that money going to provide better services. Then ZRA officials wanted a cut to process refunds. VAT just stunk rent-seeking and outright corruption. No wonder Great Nations like the USA did not go VAT. Only miseries like BREXIT UK did.
I guess it is wrong to change the whole law in order to target one sector of the economy. The Minister promised to table the bill in Parliament on Tuesday and according to this article is Friday the 2nd April, which calendar is being used here?
VAT paid is reclaimed at each stage of the distribution chain where value is added . It is finally paid by the consumer. Sales tax paid along the distribution chain would not be deductible by business and the consumer would have to pay all the additional costs along the way.
It is clear from the above that abolishing VAT would spike the prices of good and services. This Changing in the tax system is driven by a desire to pay the debt which has been misappropriated. If the debt was properly invested rather than stolen, it would have generated more revenue to repay it.
I have got a PHD in VAT. What does this mean to my qualification.