We can’t collect all tax because some companies have gone down – ZRA

ZRA Commissioner General Kingsley Chanda says Zambia may reach a stage where the Ministry of Finance will have to deal with the tax debt accumulated by some companies that have gone under.

Speaking when he appeared before the Public Accounts Committee (PAC) chaired by Howard Kunda, Chanda said it was difficult to collect tax from companies that had gone under hence the need for the Ministry of Finance to step in in order to clean the books.

Meanwhile Secretary to the Treasury Fredson Yamba said misappropriation of public funds was outright theft which required erring officers to be fired immediately.

“We have signed time-to-pay agreements with companies that were owing who came voluntarily. We have also started enforcements on those that are on our debt list but they haven’t stepped forward during the amnesty. There is also a component of debt and a big chunk of that, that is what government is dealing with and that is why ST (Secretary to the Treasury) was talking about. When you look at companies that have gone under where we can’t collect the tax at all, we may have to reach a stage where the Ministry of Finance has to deal with that debt so that we clean our books,” Chanda said.

Chanda also told the Committee that there was a mismatch of 44,000 motor vehicles between the commission and the Road Transport and Safety Agency (RTSA).

“Our engagements with banks or indeed any other third party, providers of ZRA is largely based on legal provisions. These companies whether they are clearing agents or banks or indeed any other tax agents are appointed under specific provisions in the laws and those laws also have penal provisions where if there is non-compliance with what they are required to do, the law specifies what action should be taken. For example for banks, if they don’t remit money on time, they get penalised and the fines are specified in the Act,” Chanda explained.

Chanda said car smuggling was rampant in Zambia.

“We have done a reconciliation. Between ZRA and RTSA, there is a mismatch of 44,000 vehicles. If you may recall that in November 2016, we declared an amnesty for motor vehicles and some people stepped forward with fake number plates and we collected about K3 million on those vehicles. We declared that amnesty because when we did that match between ZRA and RTSA in terms of the vehicles that have been cleared, there was a mismatch of 44,000 vehicles. It is a big problem and no one would really brush that aside, its a serious issue. Motor vehicle smuggling in Zambia is a serious problem.”

He revealed to the Committee that the Commission would stop clearance of imported vehicles inside the country.

“There is so much border shopping in Zambia. We want to ensure that taxes on motor vehicles are predictable. If you buy your vehicle at $10, you must know that your taxes will be $8, $7 without negotiating with anyone, without knowing anyone. We want to stop clearance of the vehicle inside the country, so we want our people to plan, to import vehicles and plan for taxes. You get to the border you pay the taxes, get all the RTSA formalities done and ZRA formalities done. Where you take your vehicle whether you want to smuggle it afterwards, that would be up to you. So we want to simplify the evaluation because we feel that the smuggling of these vehicles has been driven by the fact that people think the taxes for motor vehicles are very high. Right now as we are sitting here, we have over 58 trucks that we have impounded for such kind of activities,” Chanda said.

He said the smuggled trucks would be donated to deserving institutions soon.

Meanwhile Dr Yamba said the Ministry of Finance was in the process of revising the Public Finance Act which would spell out what punitive action to be taken against erring officers.

“If you look at the current Public Finance Act, issues to do with a number of queries raised like un-vouchered expenditure, this simply means that there was no voucher when the auditor general went on site, but the payment was done. And later on when the officers appear before this honorable committee, they will say ‘look the vouchers were actually available. Now what should bring to the mind of the person is that was money stolen or not? Misappropriation is outright theft and its Cristal clear in the Public Finance Act that if somebody steals public money, that person must be taken by the controlling officer to the police immediately and the appropriate action is to fire that erring officer,” said Yamba.

“But going forward, we want to ensure that there is appropriate penalties to be paid, hence the revision of the Public Finance Act. And I want to agree with the Minister of Finance that currently, the legislative committee is sitting and the Public Finance will be brought to parliament for approval. And then we can see punitive action that will be taken against erring officers because without that, what will happen is that in the minds of people, we would love all these audit queries appearing here.”

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