Minister of Finance and National Planning Dr. Situmbeko Musokotwane has said successful combating of illicit financial flows will generate positive impacts for the good governance of the country, economic growth and poverty reduction.
Giving a statement on the report of the parliamentary planning and budgeting committee on the effects of illicit financial flows on the budget and its sustainability, Dr. Musokotwane said Zambia is not spared from the scourge of illicit financial flows
He told Parliament that any form of illicit financial flows such as, through tax evasion or abusive tax avoidance leads to a haemorrhage of vital resources for the government which consequently undermines national development efforts.
Dr. Musokotwane said it is imperative for Zambia to continue cooperating with other jurisdictions to combat financial crimes.
“Madam Speaker, let me take this opportunity to thank the Planning and Budgeting Committee for the important report tabled on illicit financial flows.Madam Speaker, as a player in global affairs, Zambia is obviously not spared from the repulsive scourge of illicit financial flows. Any form of illicit financial flows from our country, such as, through tax evasion or abusive tax avoidance leads to a haemorrhage of vital resources for the government which consequently undermines our development efforts.Madam Speaker, successfully combating illicit financial flows will generate positive impacts for the good governance of our country, economic growth and poverty reduction,” he said.
Dr. Musokotwane highlighted some of the Strategies the Government has instituted, through Zambia Revenue Authority (ZRA), to fight tax evasion and financial crimes.
“Given the transnational nature of illicit financial flows it is imperative for Zambia to continue cooperating with other jurisdictions to combat financial crimes. Therefore, the importance of advancing international tax cooperation and tackling illicit financial flows to safeguard and mobilize domestic resources to bridge the financing gap in attaining the Sustainable Development Goals will remain crucial in our developmental efforts.Let me highlight some of the Strategies the Government has instituted, through Zambia Revenue Authority (ZRA), to fight tax evasion and financial crimes,” he said.
Dr. Musokotwane continued:”Zambia Revenue Authority has set up a dedicated investigations unit that targets countering tax evasion practices and prosecuting such offences and a number of persecution cases have been recorded. The Authority has further set up the Enforcement unit whose mandate is partly executing anti-smuggling initiatives.Since 2012 ZRA has been building capacity for transfer pricing audits, to this effect a number of officers were identified who have been trained over the years to increase their knowledge in transfer pricing. The officers have attended transfer pricing training in countries like Malaysia, Netherlands, France, South Africa, Norway, South Korea etc.”
In 2016 ZRA established the transfer pricing unit which is expected to conduct specialised audits that can detect transfer pricing practices among multinational companies.
“The ZRA has also partnered with collaborating partners over the past few years such as the OECD, UN, ATAF, IBFD to offer training to the officers on dealing with multinationals and international taxation in general which covers transfer pricing.The Zambia Revenue Authority has set up a functional forensic lab with the help of government and other cooperating partners that will help auditors and investigators uncover hidden financial transactions and trace illicit financial flows,” Dr. Musokotwane said.
“This will help the Authority monitor suspicious transactions and potentially tax proceeds from the informal sector. The requirement will also shine a light on businesses/ persons that shy away from declaring their source of income. It is expected that with the roll out of the transaction monitoring devises in 2018, tax evasion and illicit financial transactions can be monitored and controlled. We have embraced the “whole of Government” approach to combat money laundering and other financial crimes, as we recognise that knowledge and skills required to effectively fight against these offences are often spread across different bodies, such as tax administrations, FIUs, specialized criminal law enforcement authorities, financial regulators and the public prosecutor’s office,” the Minister of Finance concluded.